By Jeff Acquafondata
In today’s rising-interest-rate environment, credit unions are positioned to take advantage of the changing mortgage landscape. As participants in the MPF Program, credit unions have a significant opportunity to leverage an array of secondary market mortgage products, enabling them to compete with the largest mortgage banks.
The January 2017 Mortgage Bankers Association (MBA) Mortgage Finance Forecast predicted a 10% increase in 1-4 Family Purchase originations for 2017. The outlook for the housing market is positive from other sources as well. Case-Shiller predicts strong growth for the economy and the housing market over the next several years.
As credit union members look to finance their home purchases or are considering refinancing, the MPF Program provides conforming, government and jumbo loan options. MPF Original and MPF 35 are products for conforming fixed-rate loans.
The MPF Program allows credit unions to manage a portion of the credit risk while simultaneously transferring the interest rate risk to FHLBank Pittsburgh or others in the FHLBank system. An absence of loan level price adjustments (LLPAs) provides a competitive advantage to credit unions looking to capture this business. In exchange for sharing credit risk, a monthly credit enhancement fee delivers income to participating credit unions.
MPF Government is available for FHA, VA, RHS Section 502 and HUD 184 loans. Upon approval by the applicable government agency to originate and service these loans, MPF Government may interest credit unions looking to fund loans quickly and easily. Servicing can be retained or released for this product.
MPF Direct delivers an opportunity to originate jumbo mortgage loan amounts up to $2.5 million. This product allows credit unions to transfer the interest rate, prepayment and credit risks to the investor. Hybrid adjustable-rate mortgages (ARMs), as well as fixed-rate options, are also available.
The Core of the Relationship
A mortgage is often the core of the relationship a credit union has with a member. The MPF Program offers a means to attract and retain members, while also opening the doors to cross-selling and future lending opportunities. This is true regardless of whether those mortgages are sold servicing retained or released.
Despite the gains in market share by non-depository mortgage banks in recent years, credit union market share has remained stable. The FHLBanks are keenly aware of the quality of mortgage loans that credit unions originate. These MPF products help to ensure credit unions can retain a competitive advantage in the current mortgage marketplace. This is a great time to reach out to your FHLBank representative to discuss the benefits that the MPF Program can deliver.
The spring home buying season is just around the corner. Savvy credit unions are poised and ready to compete with national mortgage players that will be soliciting their members. Be prepared with the MPF Program!
Jeff Acquafondata is the MPF Program Business Development Manager at FHLBank Pittsburgh. For more information, call 412-288-5190, email Jeff.Acquafondata@fhlb-pgh.com or visit www.fhlbmpf.com.