FHLB of Chicago And Ginnie Mae Gear Up For MBS Sale

Posted by Patrick Barnard on September 16, 2013 No Comments
Categories : Residential Mortgage

The Federal Home Loan Bank (FHLB) of Chicago and the Government National Mortgage Association (Ginnie Mae) are gearing up to issue securities guaranteed by Ginnie Mae and backed by mortgages originated by member financial institutions.

The new conduit product, called MPF Government Mortgage-Backed Securities (MBS), ‘will provide mortgage lenders, particularly smaller institutions that currently lack direct access to the secondary mortgage market, a new option when creating mortgage products for their home-buying customers,’ the Chicago FHLB states on its website. ‘Lenders will be able to choose whether to retain or release servicing on the government loans they originate, and they will have a reliable channel for selling their loans that removes hurdles low-volume originators face in today's competitive market.’

The MBS will initially be made available to eligible participating members of the FHLB of Chicago in Illinois and Wisconsin before being rolled out more broadly next year.

‘This effort is an important move toward satisfying a critical strategic initiative of Ginnie Mae to find a way to expand access to our program to small lenders,’ says Ted Tozer, president of Ginnie Mae. ‘The Ginnie Mae and FHLB Chicago partnership leverages the strengths of each of the institutions and will facilitate Federal Housing Administration, Veteran's Affairs and Rural Development lending by small banks, some of whom are operating in areas where borrowers have had limited access to government loan programs.’

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