[Federal Register: August 7, 1998 (Volume 63, Number 152)]
[Notices]               
[Page 42400]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au98-107]

=======================================================================
-----------------------------------------------------------------------

FEDERAL HOUSING FINANCE BOARD

[No. 98-N-6]

 
Federal Home Loan Banks' Mortgage Partnership Finance Pilot 
Programs

AGENCY: Federal Housing Finance Board.

ACTION: Notice and opportunity for comment.

-----------------------------------------------------------------------

SUMMARY: In December 1996, the Federal Housing Finance Board (Finance 
Board) authorized the Federal Home Loan Bank (FHLBank) of Chicago to 
establish a pilot program, called ``Mortgage Partnership Finance'' 
(MPF), under which the FHLBank of Chicago may purchase from, or fund 
through, participating member institutions up to $750 million of one-
to-four family residential mortgage loans originated by such members. 
MPF allocates the individual risk components associated with home 
mortgage lending between the FHLBank and its members in a manner that 
uses the cooperative structure of the FHLBank System to maximize their 
respective core competencies. See 62 FR 5828, 5830-31 (Feb. 7, 1997) 
(describing in detail the MPF program). There has been a strong and 
increasing level of demand for MPF from members of the FHLBank of 
Chicago during the year that the pilot program has been in operation.
    Several other FHLBanks have indicated interest in seeking Finance 
Board approval to offer pilot MPF programs to their members. 
Accordingly, Finance Board staff currently is preparing recommendations 
for the Board of Directors of the Finance Board regarding the 
establishment of terms and conditions pursuant to which any FHLBank may 
be permitted to offer MPF to its members on a pilot basis and under 
which the $750 million cap on MPF may be modified. Specifically, staff 
is considering the establishment of terms and conditions regarding: 
national or regional pricing; FHLBank capital requirements or other 
standards to manage the credit risk that may arise in conjunction with 
the larger volumes of MPF product that could result from an expansion 
of the program; the capacity of the existing MPF system to handle 
larger volumes of transactions; the degree to which MPF should be 
targeted to, or have performance goals established with respect to, 
particular populations or areas; and the criteria by which the success 
of the program will be evaluated. In addition, staff is contemplating 
recommending that the Board of Directors of the Finance Board modify 
the existing MPF dollar cap to meet member demand and to facilitate 
adding other FHLBanks to the program on a pilot basis. As part of these 
efforts, and consistent with its published Policy and Procedures for 
Pilot Proposals (Pilot Procedures), see 62 FR 63178 (Nov. 26, 1997), 
Finance Board staff is hereby giving notice of impending Finance Board 
action and offering an opportunity for public comment regarding the 
establishment of approval procedures and criteria, terms and conditions 
for pilot program operation, and modifications to the dollar limit on 
FHLBank System-wide MPF investments. Pursuant to the Pilot Procedures, 
the Board of Directors of the Finance Board will not act on these 
matters earlier than 30 days from the date of publication of this 
Notice.
    Finance Board staff is not contemplating a recommendation that the 
MPF program be authorized to move beyond the pilot phase at this time. 
Staff anticipates recommending to the Board of Directors of the Finance 
Board that the FHLBank of Chicago and other FHLBanks that may gain 
approval to offer MPF to their members should continue to be monitored 
and evaluated by the Finance Board for compliance of MPF programs with 
the pilot program criteria set forth in section II.B.12 of the Finance 
Board's Financial Management Policy for the FHLBanks and with any other 
criteria that may be established pursuant to the action of the Board of 
Directors of the Finance Board.

ADDRESSES: Mail comments to Elaine L. Baker, Executive Secretary, 
Federal Housing Finance Board, 1777 F Street, NW., Washington, DC 
20006. Comments will be available for inspection at this address.

FOR FURTHER INFORMATION CONTACT: Scott L. Smith, Deputy Director, 
Program Development Division, Office of Policy, (202) 408-2991, Federal 
Housing Finance Board, 1777 F Street, NW., Washington, DC 20006.
William W. Ginsberg,
Managing Director.
[FR Doc. 98-21118 Filed 8-6-98; 8:45 am]
BILLING CODE 6725-01-P