Chicago FHLB Eyeing MPF Options

The Chicago Federal Home Loan Bank is looking for new ways to fund and capitalize mortgage acquisitions under its mortgage partnership finance program and to resell MPF loans.The changes to the MPF program are part of a new capital and business plan that has been accepted by the FHLBank's regulator. Under the plan, the Chicago bank said it "will explore alternative methods of capitalizing and funding MPF assets including techniques to liquefy MPF assets, creating additional capacity for the bank and other FHLBs." The Chicago bank has used excess or "voluntary" stock to capitalize its MPF loan portfolio. It has to reduce its reliance on voluntary stock as part of the capital plan. The Chicago bank remains committed to the MPF program, according to president and chief executive J. Mikesell Thomas. But MPF assets are expected to remain flat or decline gradually during the capital restructuring period. "Paydowns of existing MPF assets will create capacity for the bank to serve the needs of participating members," the Chicago FHLBank said.