MPF Direct is a jumbo loan product that partners the MPF Program with Redwood Trust, Inc., a real estate investment trust located in Mill Valley, CA. This unique partnership offers Federal Home Loan Bank Participating Financial Institutions (PFIs) the opportunity to access private capital when they sell their fixed-rate mortgages into the secondary market, leveraging their FHLBank membership to obtain liquidity for loans up to $2.5 million.
The MPF Direct product benefits PFIs that want to:
- Offer competitive fixed-rate and hybrid adjustable-rate, jumbo residential mortgage loans to their borrowers without metropolitan statistical area (MSA) restrictions
- Sell the servicing rights
- Receive attractive all-in pricing (asset price + servicing-released premium)
- Continue the ability to cultivate and/or maintain relationships with their customers and
- Transfer the interest rate and credit risks of the jumbo loan to an investor.
With no retained credit risk on loans sold under the MPF Direct product structure, PFIs have no risk-based capital or credit risk collateral requirements.*
Features of the MPF Direct product are:
- Maximum LTV: 90%
- Loan Limits: Up to $2.5 million; limits are adjusted for high-cost areas
- Occupancy: Owner-occupied, second homes, and investment properties
- Property Type: 1-4 units
- Delivery Commitment: Best Efforts
- Remittance: Servicing Released only
PFIs that want the advantages of the MPF Direct product must obtain specific approval through the Federal Home Loan Bank of Chicago.
*The FHLBanks do not provide accounting or legal advice with respect to the accounting treatment of MPF Program assets and liabilities. The participating member is expected to consult with its own accountants and attorneys on this matter.