Chicago Opens Door for Other FHLBs to Pool Government Loans
To become a Ginnie Mae MBS issuer, the Federal Home Loan Bank of Chicago had to get the GSE regulator’s approval for the new activity.
The Chicago FHLB has been aggregating conventional loans and selling the whole loans to Fannie Mae for years under its Mortgage Partnership Finance program that is known as MPF Xtra.
As a Ginnie Mae issuer, “we will be pooling securities on our balance sheet until we have enough to create a Ginnie Mae MBS,” said Chicago FHLB president Matt Feldman.
“It is a more traditional form of aggregation” than MPF Xtra, he said, so Federal Housing Finance Agency approval was needed.
The Chicago bank plans to roll out the new MPF Government-Backed Mortgage Securities program in its district, which covers Illinois and Wisconsin, later this year.
But the other seven MPF-participating FHLBs will have to wait until they get FHFA approval before they can start aggregating FHA, VA and Rural Housing loans into Ginnie Mae pools.
Now that the Chicago bank has been approved, Feldman noted that it should be easier for other MPF participating FHLBs to go through the FHFA approval process.
The Chicago bank will do Ginnie multi-issuer securities as the other FHLBs join the new Ginnie Mae securities program. The Chicago FHLB will remain the actual MBS issuer.