Notes from the Mortgage Desk: We Can Help Grow Your Business

March 12, 2020

Market Commentary

The mortgage markets are currently facing unprecedented times related to the level of mortgage rates, interest rate volatility, and changes in bond market spreads. Assessing potential declines in the credit landscape, and its impact on housing markets, is currently difficult based on the unknown economic effects of COVID-19. MPF® Traditional products have especially been sensitive to the volatility of FHLBank Chicago’s debt levels, which have been impacted by market uncertainty.

We appreciate your patience and loyalty to the MPF Program during these challenging times, especially when your customer demand for mortgage origination might be at or near record highs. The MPF Program has proven to be a reliable source of liquidity, as overall origination volume has surged nationwide.

Here are the ways the MPF Program is responding to the market movement:
  • Extending MPF Traditional minimum note rate pricing from 3.00% to 2.75%
  • Continuing to pay-up for Low Loan Balance loans (less than $200,000)
  • Strong pricing emphasis on the lowest, most competitive borrower rates
As a reminder to you during this market dislocation: 
  • We offer MPF Xtra® as an additional option for your fixed rate, conventional conforming loans. There are some differences versus MPF Traditional, including the option to lock in Delivery Commitments on a Best Efforts basis*.
  • In addition to MPF Xtra, the MPF Program offers other opportunities in order to provide a broad range of options to members under all market conditions. See below for two competitive opportunities.
Have you taken advantage of the recent elimination of VA loan conforming loan limits?

As of January 1, 2020, veterans seeking to obtain what are commonly referred to as jumbo loans, or veterans living in higher-cost markets, will no longer be subject to the Federally-established VA loan limit (e.g. conforming loan limit maximums). This means that veterans may obtain no-down payment VA-backed loans in all areas of the country, regardless of home prices.

Note: Loan limits still apply for those who have more than one active VA loan, only partial entitlement available or those who have defaulted on a previous loan.

You can read more here.

Is your business growing in government jumbo mortgages? Did you know the Federal Home Loan Bank of Chicago (FHLBank Chicago) can buy your government jumbo mortgages?

Look to partner with the FHLBank Chicago on government 30-year and 15-year loans sold through the MPF Government MBS product!

Why? 

Loans sold into MPF Government MBS are securitized through FHLB GNMA MBS securities under the “JM” GNMA MBS prefix. The FHLBank Chicago is able to offer advantaged pricing for jumbo loans sold under the “JM” prefix for a certain time period/right now. Eligible loan types include FHA, VA and RHS 30-year and 15-year loans with Scheduled/Scheduled remittance.  

For example, selling into MPF Government MBS with two jumbo VA loans totaling $1.5mm would receive a pricing improvement of 0.375% versus normal jumbo government loan pricing, which would provide an extra $5,625 in gain on sale for your member institution.

This benefit is limited to 10% of our pools. Act now to ensure your institution takes advantage of this benefit!

Want to learn more?

Contact us to explore the opportunity to position your institution for pricing opportunities across the MPF Program (e.g. MPF Traditional, MPF Xtra, MPF Direct, and MPF Government MBS).

*Best Efforts may require a new Master Commitment

Contact your Sales Director for more information.

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