The $5 million security is backed by mortgages originated by community lenders through MPF's government mortgage-backed securities (MBS) product.
‘This is an important milestone for the MPF Program,’ says Matt Feldman, president of the Federal Home Loan Bank of Chicago, which operates the MPF Program on behalf of nine Federal Home Loan Banks, in a release. ‘Ginnies are among the most liquid financial instruments in the world, and this new product allows us to enable FHLBank members to offer competitive Federal Housing Administration (FHA), Veterans Affairs and Government Guaranteed Native American and Rural Housing mortgages.’
‘Community lenders are uniquely situated to fulfill the hopes and dreams of everyday families,’ says JuliÃ¡n Castro, secretary for the U.S. Department of Housing and Urban Development, in a statement. ‘Ginnie Mae is committed to providing our local partners with the resources they need to expand housing opportunity for all Americans.’
‘This agreement is a great example of how the Ginnie Mae MBS program continues to level the playing field by allowing community-based financial institutions to effectively compete with mega banks for home buyers in their communities,’ adds Ted Tozer, president of Ginnie Mae. ‘Now they can connect directly to the capital markets, improving the home financing options they can offer to their customers without the burden of having to individually obtain and maintain Ginnie Mae approval.
‘Looked at another way, it allows Ginnie Mae to distribute its program more broadly without dramatically increasing the number of counterparties we must manage. In this sense, it is a model for how Ginnie Mae should operate in the future,’ Tozer notes.
To read the full announcement, click here.