FHLB Offers Servicing Transfers

The Seattle Federal Home Loan Bank has teamed up with a mortgage servicer so that participants in its Mortgage Purchase Program can sell their loans serving released.

This new MPP feature will allow participating banks and thrifts to sell their 1-4 family loans to the FHLBank and concurrently sell the servicing rights to Principal Residential Mortgage Inc., Des Moines, Iowa.

"This option is in response to a majority of our membership," said MPP director Greg Teare.

The Seattle bank has 375 member institutions and a survey showed that "nearly 85% of our members are presently selling their loans on a release basis," Mr. Teare said.

Only 24 members are participating in the Seattle MPP program. In connection with the announcement of the servicing release option last week, the Seattle bank is launching a marketing campaign to encourage more members to sign up for the secondary market program.

The FHLBank has funded over $10 billion in loans since MPP was started three years ago. So far this year, the Seattle bank has funded $1.9 billion in loans.

The Chicago FHLBank announced a servicing release option for the rival Mortgage Partnership Finance program earlier this year and the first concurrent transaction was completed in April.

Fourteen MPF participants are using this option to sell their servicing rights to Colonial Savings FA, in Fort Worth, Texas.

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