Home Loan Bank of New York Caps
Annual
MPF® Deliveries at $100 Million
Contact: Eric Amig - 212 441-6807 |
March 18 , 2005 |
New Orleans, Louisiana -- Alfred A. DelliBovi, President of the Federal Home Loan Bank of New York, stated as of March 15, 2005, the Home Loan Bank of New York limited future commitments for mortgage deliveries from each approved Mortgage Partnership Finance® (MPF®) lender to $100 million per year. Mr. DelliBovi made this announcement today during the 2005 Annual Convention of the New Jersey Bankers Association held in New Orleans.
"The Bank is imposing this cap to ensure that the MPF program continues to serve the medium- to small-size community banks in our District," said Mr. DelliBovi. "Our objective at the Home Loan Bank of New York is to provide a better deal for our members than they can get elsewhere and at the same time maintain the growth of MPF assets on our books at a manageable rate."
Currently, the Home Loan Bank has total assets of $83 billion, of which $1.2 billion are MPF assets. MPF assets represent 1.4% of total assets.
This action will have no effect on the majority of the 64 MPF lenders. The majority of these lenders maintain an MPF production level below $100 million per year.
"We believe the MPF program adds value to membership and we also believe MPF assets are good for the Bank. But the risks of the program must be managed prudently and in an extremely conservative manner," added Mr. DelliBovi.
The MPF program gives community lenders an alternative to holding home loans in portfolio or selling them to secondary market agencies. The MPF program allocates the inherent risks of long-term, fixed-rate lending between the Federal Home Loan Bank (FHLB) and its participating member. Under the program, the participating member creates the mortgage and manages all aspects of the customer relationship, including servicing the loans. By providing a limited, second-loss credit enhancement, the member also manages a portion of the credit risk of the loans and receives a fee for taking on the credit risk. The FHLB owns the mortgages and holds them in portfolio. It manages the funding, interest rate, liquidity, and prepayment risk of the loans and establishes a spread account to absorb expected first losses. This structure allows community lenders to retain their customer relationships and to receive a better return for taking on a portion of the credit risks of the loans.
The Federal Home Loan Bank of New York is an $83 billion, Aaa-rated, Congressionally chartered, wholesale bank. It is part of the Federal Home Loan Bank System, a national wholesale banking network of 12 regional, stockholder-owned banks. The Federal Home Loan Bank of New York serves 304 community lenders in New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands. The mission of the Home Loan Bank is to advance housing opportunity and local community development by maximizing the capacity of community-based member-lenders to serve their markets.