Plaintiffs in MPF Lawsuit File Appeal

A federal appeals court is reviewing a lower court's decision to dismiss a lawsuit challenging the legality of the Federal Home Loan Bank of Chicago's "mortgage partnership finance" pilot program.Federal District Court Judge Sam Sparks recently ruled that the Federal Housing Finance Board did not exceed its authority when it approved the MPF pilot in May 1997. However, the plaintiffs in the case did not agree with the ruling and filed an official appeal Thursday with the U.S. Fifth Circuit Court of Appeals, according to their attorney, Harris Weinstein, a lawyer with Covington & Burling, Washington. The plaintiffs include the Texas Savings and Community Bankers; World Savings & Loan, Oakland; Charter One Bank, Cleveland; and the Western League of Savings Institutions. To date, the Chicago FHLB has granted roughly $550 million in master commitments and funded $231 million in residential product through the MPF pilot. The program makes the Chicago bank a direct competitor of Fannie Mae and Freddie Mac. The program allows depositories that are FHLB members to use the bank's funds to originate conventional mortgages. The loans are placed on the balance sheet of the FHLB.