MPF Loans Rise Slightly in 3Q

The Federal Home Loan Banks purchased nearly $23.8 billion in single-family loans under the Mortgage Partnership Finance program in the third quarter, up slightly from the total recorded in the second quarter.The Chicago FHLBank reported that single-family MPF loan purchases rose by 7.7% in the third quarter, up from $22.1 billion in the second quarter. MPF loans funded in the third quarter of 2002 totaled only $6.1 billion. Over 90% of the loans funded in the third quarter were conventional loans, as opposed to government-guaranteed loans. And MPF loans outstanding totaled $81.5 billion as of Sept. 30, up 136% from a year ago. The MPF gives FHLBank members a "better deal" than selling their loans to Fannie Mae and Freddie Mac, according to Chicago FHLBank president Alex Pollock. "The MPF program also benefits the mortgage finance system more broadly," Mr. Pollock said. "As it grows, the mortgage credit risk is spread among hundreds of lending institutions, which is a sounder strategy than concentrating it in two giant companies."