Tuesday, Fannie Mae (FNM) and wholesale bank Federal Home Loan Bank of Chicago, or FHLB, announced a new partnership whereby Fannie Mae will purchase 30- and 15-year fixed rate mortgage loans from FHLB Chicago in an effort to provide additional liquidity and stability to the mortgage market.
Fannie Mae would purchase loans channeled through FHLB Chicago's Mortgage Partnership Finance, or MPF, Program, a eleven year-old program that has provided funding to hundreds of member community banks, thrifts and other financial institutions.
By providing this additional source of funding for MPF mortgages, Fannie Mae said it helps both organizations meet national calls to expand their service to the market and provide more liquidity.
While the arrangement is currently available to FHLB Chicago member institutions through the MPF Xtra product, other FHLBs that participate in the MPF Program may seek to offer the MPF Xtra option to their members in the future.
Matt Feldman, president and chief executive officer, FHLB Chicago, said, "Our partnership with Fannie Mae facilitates access to the secondary market through the familiar infrastructure of the MPF Program. Most importantly, this program will make it easier for the majority of our members to continue to offer competitively priced fixed-rate mortgages to their customers in their communities."
The agreement is approved by the Federal Housing Finance Agency, a regulator of both the Home Loan Banks and Fannie Mae, and allows Fannie Mae to work with an experienced counter-party with established business processes for loan commitment and funding and to provide an efficient secondary platform for small lenders.
The company said the agreement is in line with FHFA Director James Lockhart's September 19th statement on the continued role of the Federal Home Loan Bank system in mortgage finance and the important role of the GSEs to provide greater stability to the market.
FNM is currently trading at $1.25, down 4 cents or 3.10%, won a volume of 32.8 million shares, and with a 52-week range of $0.35 to 67.50 on the NYSE.
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