ABA, MPF Form Alliance

The American Bankers Association wants to provide credit enhancements for pools of Mortgage Partnership Finance loans so that community banks will find it more cost-effective to sell their loans into the Federal Home Loan Bank's secondary market program.Under the alliance, the ABA would help the FHLBanks market the MPF program to increase community bank participation, and an ABA subsidiary, the Corporation for American Banking, would provide credit support for MPF loan pools. "Because this will result in larger volume and wider geographic representation, participating banks will receive additional fee income and added value -- at no cost -- for their MPF mortgages," a joint press release by the ABA and the FHLBank of Chicago said. ABA senior counsel Joseph Pigg said "nothing is finalized yet," but he noted that the alliance is more than a joint marketing agreement. The two partners said they will be ready to announce the full details of the alliance in the first quarter.