Through the MPF Xtra product, Participating Financial Institutions are able to leverage their membership in their Federal Home Loan Bank and access its low-cost options to sell fixed-rate, conforming loans into the secondary market.
PFIs that take advantage of the MPF Xtra product have the flexibility to:
- Offer fixed-rate residential mortgage loans to their borrowers and deliver those loans into the secondary market
- Retain or sell the servicing rights and servicing fee income. Under either option, PFIs preserve the ability to cultivate and maintain relationships with customers
- Transfer the interest-rate and prepayment risks as well as the credit risk of the associated loans to an investor
Since the PFI does not retain the credit risk in loans sold under the MPF Xtra product, there are no collateral or risk-based capital requirements.
Who Should Take Advantage of This Product?
The MPF Xtra product is for any PFI that is actively engaged in mortgage lending in its community and has a high regard for the value of customer relationships. PFIs gain access to secondary market liquidity, minimize their interest-rate and prepayment risks, and transfer the credit risk of the loans to the investor. The originating PFI can retain or sell the servicing rights and in either case retain the associated valuable borrower relationships.
Access to Desktop Underwriter®
PFIs can obtain access to Fannie Mae's Desktop Underwriter (DU®) and take advantage of its state-of-the-art technology. The use of DU may result in limited waivers of certain PFI loan origination representations and warrants including the mortgage loan's eligibility for delivery and the borrower's creditworthiness, provided that certain conditions are met. As a PFI selling the MPF Xtra product, you will not incur the cost of the typical DU implementation fee. You only pay a reduced transaction fee, a significant savings and market advantage.
- Competitive execution
- Economic value for quality loans
- Retention of borrower relationships
- Access to Desktop Underwriter
Best Efforts Delivery Commitment
Best Efforts Delivery Commitments are available under the MPF Xtra® product. Federal Home Loan Bank (FHLBank) PFIs are able to take advantage of the MPF Xtra product, which offers:
- The transfer of interest-rate prepayment risks as well as the credit risk of the associated loans to an investor
- Delivery Commitments under a Best Efforts option for individual loans, with no pair-off fees for non-delivery
- The ability to originate fixed-rate residential mortgage loans and delivery of those loans into the secondary market
- Retention of the servicing rights and servicing fee income, preserving the ability to cultivate and maintain relationships with customers
- No collateral or risk-based capital requirements*
Who should take advantage of this option?
MPF Xtra Best Efforts Delivery Commitments are for any PFI that is actively engaged in mortgage lending in its community, has a high regard for the value of customer relationships, and seeks to more effectively manage its origination pipeline. If the associated loan closes, the PFI must deliver that loan under the Delivery Commitment; however, there is no pair-off fee assessed if the loan does not close and the Delivery Commitment expires. PFIs gain greater access to secondary market liquidity and minimize the associated interest rate risk due to market changes.
PFIs will continue to have the option of manually underwriting the loans or obtain access to Fannie Mae's Desktop Underwriter® (DU®) taking advantage of state-of-the-art technology. Utilizing DU reduces a PFI's loan origination representations and warrants to the investor.
- Receive a competitive execution with delivery flexibility
- Enhance pipeline management tools
- Reduce exposure to interest rate fluctuations
- Realize economic value for quality loans
*The MPF Program is not providing accounting or legal service with respect to the accounting treatment of MPF Program assets and liabilities. The PFI is expected to consult with its own accountants and attorneys for advice on this matter.