August 24, 2014

Chicago FHLB begins MBS pilot with Ginnie Mae

Aug. 18, 2014 – The Federal Home Loan Bank of Chicago is nearing the launch of its pilot program that will allow its member institutions to originate and sell government-backed loans into Ginnie Mae mortgage-backed securities.

American Banker reported that the Federal Housing Finance Agency recently gave the Chicago FHLB approval to start the pilot program, which is limited to FHLB member institutions in Illinois and Wisconsin.

The conduit program, called Mortgage Partnership Finance Government MBS program, was discussed by Ginnie Mae President Ted Tozer during NAFCU's 2013 Congressional Caucus. He said then that the program is aimed at smaller institutions that lack direct access to the secondary mortgage market.

In Ginnie Mae's announcement about the program last September, the entity said lenders participating in its new product will be able to choose whether to retain or release servicing on the government-guaranteed loans they originate.

American Banker noted that once the pilot programs are ready, the Chicago FHLB intends to give other FHLBs that participate in the Mortgage Partnership Finance program access to the MPF Government MBS program and the jumbo MPF Direct program – for jumbo loans.