The origination of Mortgage Partnership Finance mortgages by the members of the Federal Home Loan Bank of Topeka hit $677 million in the second quarter, up nearly 50% from the fourth quarter.
Topeka FHLB chief operating officer Dave Fisher attributes the increase to the high demand for refinancings, greater MPF participation by FHLB members, and competitive pricing with Fannie Mae and Freddie Mac products.
During the second quarter, 173 member banks, thrifts or credit units sold loans into the MPF program. “That’s a record number of participants,” Fisher said. Roughly 150 of those members routinely sell loans to the Topeka bank every month.
The Topeka FHLB district has 829 member institutions in Colorado, Kansas, Oklahoma and Nebraska.
Topeka members originated $454 million in MPF loans in the fourth quarter and $619 million in the first quarter.
The surge in MPF lending has increased the Topeka bank’s mortgage portfolio to $5.55 billion, up from $4.57 billion in the second quarter of 2011.
To control the growth going forward, Topeka wants to sell or participate out MPF loans to other FHLBs. “That is something we are actively pursuing to help us control the amount we retain on our balance sheet,” said Dan Hess, senior vice president for member programs.
The percentage of Topeka’s MPF loans that are 30 days or more past due was 1.3% as of June 30. The MPF program requires lenders to retain a small percentage of the credit risk on each loan.
The Topeka FHLB also will roll out its MPF Xtra program during the third quarter, giving members the option of selling loans via a conduit to Fannie Mae.
Unlike the traditional MPF program, the Xtra conduit program operated by the Chicago FHLB does not require lenders to retain a portion of the credit.
“We are operational and ready to offer the MPF Xtra product,” Hess said. A few members are participating on a “beta” basis and others are receiving pricing on MPF Xtra loans.
“We are hearing from our members there are advantages to working through the MPF Xtra program rather than going to Fannie Mae directly,” Hess said.
