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Topic: RSS FeedFederal home loan bank files brief in MPF lawsuit
Northwestern Financial Review, Nov 22, 1997
The Federal Home Loan Bank of Chicago, joined by a group of other financial institutions and trade groups, filed an amicus brief last month urging dismissal of a lawsuit against the Federal Housing Finance Board. Opponents of the FHLB-Chicago's new Mortgage Partnership Finance pilot program have sued the Finance Board for allegedly approving the pilot without authority.
"As our brief explains, the Finance Board clearly has authority, under two separate sections of the Federal Home Loan Bank Act, to approve the MPF program, "said Alex J. Pollock, president and CEO of the FHLB-Chicago.
Through the MPF program, the FHLB funds the loan and keeps the title, while the member bank closes the loan and keeps origination fees. Traditionally, FHLBs have not funded home loans directly.
"The MPF program is a new way of achieving the traditional housing finance mission which Congress established for the FHLBs," Pollock continued. "Both MPF loans and traditional FHLB advances have the identical purpose of funding residential mortgages for American home buyers through member institutions. In both instances, the member underwrites, processes and services the mortgage loans and is responsible for the customer relationship.
"MPF is a superior alternative to selling fixed-rate mortgages in the secondary market. MPF will benefit member banks and thrifts, and ultimately, American home buyers."
The friend of the court brief was filed with the U.S. District Court for the Western District of Texas. Cosigners include: AnchorBank, S.S.B.; First Federal Savings Bank LaCrosse-Madison; First Financial Bank; LaSalle Bank, F.S.B.; Liberty Federal Bank; Mid America Federal Savings Bank; the Illinois League of Financial Institutions; the Wisconsin League of Financial Institutions, Ltd.; and the Federal Home Loan Banks of Atlanta, Des Moines, Indianapolis, New York and Pittsburgh.
Since the program began in midsummer, MPF has funded more than $10 million in fixed-rate mortgages through four participating members of the FHLB-Chicago. In addition, it has master commitments for more than $100 million in funding. The pilot is authorized to fund $750 million of loans through up to 20 member institutions.
(For more information on the Mortgage Partnership Finance program, see page 18 of the August 23, 1997 edition of Northwestern Financial Review.)
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