Lower Level of Credit Enhancement Available on MPF Loans
December 2, 2016
FHLBank Topeka is pleased to announce we are lessening the credit enhancement (CE) requirement for Mortgage Partnership Finance® (MPF) loans to better align with the superior credit quality of the loans you’re selling into the MPF Program. This reduction in CE, and the corresponding reduction in the risk-based capital required to support the CE, will further enhance your overall execution on the sold loans.
As a result, all current loan sales under the MPF Program with associated loan presentments on or after Monday, Dec. 5, will automatically be reassessed resulting in a lower CE for your institution. If you have an existing loan presentment (prior to Dec. 5) that has not funded, re-submit your data to allow the system to reassess the credit risk under the lower rating methodology.
For loans sold to FHLBank in the past, the CE realignment methodology takes into account the MPF product type as well as the overall credit coverage requirement for an individual master commitment and may result in a decrease to your CE obligation.
Existing PFIs should watch for a letter in mid-December explaining how to take advantage of this realignment offer for previously sold loans.
Questions about the CE realignment can be directed to
Chris Endicott, VP, MPF Sales Manager, at 866.571.8171 or
Kathy Schmidtberger, VP, Product Development and Business Research Officer, at 785.438.6086.
"Mortgage Partnership FInance" and "MPF" are registered trademarks of the Federal Home Loan Bank of Chicago.