MPF® Products
The HLB offers two different MPF conventional loan products, allowing the Participating Financial Institution (PFI) to choose the extent of credit risk they are comfortable with. With these products, the PFI originates, closes, and then sells the loans to the HLB. Regardless of the MPF product used, PFIs retain all typical origination, closing, and miscellaneous fees, while the HLB pays PFIs Credit Enhancement (CE) and servicing fees.
| |
ORIGINAL MPF® |
MPF® 125 |
| Loan Type |
Conventional/
Conforming |
Conventional/
Conforming |
| Minimum "best efforts" master commitment |
$5 Million |
$5 Million |
| HLB First Loss Account |
4 bps annually
(multiplied by the PFI’s outstanding loan balance) |
100 bps annually
(of the total funded amount of loans sold) |
| PFI's CE Obligation |
Amount equivalent to "AA" credit risks |
Amount equivalent to "AA" credit risks less the 100 bps first loss account |
| CE Fee paid to PFIs |
10 bps
(not performance-based) |
7-10 bps
(performance-based: allows the HLB to recoup losses charged to the First Loss Account from future CE fees) |
| Servicing Fee paid to PFIs |
25 bps
|
25 bps
|
| Servicing released alternative |
Yes |
Yes |
| Risk-based capital requirement |
Equal to the PFI's CE obligation |
Equal to the PFI's CE obligation |
PFIs can deliver fixed-rate conforming conventional mortgage loans with terms from 5 to 30 years on owner-occupied and second homes. Property types include 1-4 unit homes, manufactured homes, condos, and Planned Unit Developments (PUDs). In addition, PFIs have a choice of remittance types: Actual/Actual, Actual/Actual Single Remittance, and Scheduled/Scheduled. The HLB also offers an MPF government loan product without the risk-sharing feature. A servicing-released alternative is available for all MPF products to maximize the value of the loans sold.
MPF conventional products require PFIs to hold risk-based capital equal to the amount of the CE obligation. PFIs are required to purchase activity-based HLB stock, equal to 4.5% of any new MPF delivery commitments, and PFIs are also required to post collateral equal to the CE obligation.
