To keep its Mortgage Partnership Finance portfolio in check, the Topeka Federal Home Loan Bank is selling $231 million in MPF loans on a flow basis to the Indianapolis FHLB.
Under the participation arrangement, the Indianapolis bank will purchase 75% of the MPF loans delivered by Topeka bank members and the Topeka bank will purchase 25% of the single-family loans.
The Indianapolis FHLB is purchasing the
(The Federal Home Loan Bank MPF and MPP programs both involve purchasing mortgages from member institutions that retain a portion of the credit risk.)
The Indianapolis FHLB district encompasses Indiana and Michigan, while the Topeka district includes Colorado, Kansas, Oklahoma and Nebraska.
The Indianapolis bank purchased $1.3 billion in MPP loans from its members in 2012.
“We expect our purchases of MPF participation interests to supplement our MPP purchases and to partially reduce the concentration of mortgage loans in Indiana and Michigan,” the Indianapolis FHLB says in its annual securities filing.
The Topeka FHLB has a $5.9 billion mortgage portfolio and it wants to keep it under control, according to Topeka FHLB senior vice president Dan Hess.
“With the Indianapolis participation and repayments, we are able to hold our MPF portfolio flat. That is our objective,” Hess said.
