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Partnership with USDA Rural Development Offers MPF^® Program Ability to Meet Specific Needs

by Peggy Stemmler, Director, Product Management

The Mortgage Partnership Finance^® (MPF^®) Program is a viable secondary market alternative for FHLBank members for a number of reasons, not the least of which is the MPF Program’s partnership with USDA Rural Development. This partnership allows approved participating financial institutions (PFIs) to sell Rural Housing Service (RHS) Section 502 government-guaranteed loans to the FHLBank.

RHS 502 guaranteed loans are offered to qualifying low- and moderate-income families to purchase or refinance homes in rural areas with populations of less than 10,000 and “non-metro” communities with populations between 10,000 and 25,000. Guaranteed loans offer many benefits to buyers such as zero down payment, no monthly insurance, and flexible credit guidelines.

PFIs sell RHS 502 loans through the Guaranteed Rural Housing (GRH) option of the MPF Government product. With the GRH option, as with other options under the MPF Government product umbrella (FHA and VA), PFIs market to borrowers, obtain the insurance or guarantee, and may choose to service the loans or take advantage of the servicing released option through Colonial Savings, F.A.

Feedback from PFIs who use the Guaranteed Rural Housing option has been very positive. Says Debbie Hagerman, Secondary Market Administrator of MCNB Bank and Trust Company, located in Welch, WV, “The ability to sell RHS Section 502 loans to FHLBank helps us meet the specific needs of borrowers in the local communities we serve. It’s one more option that bolsters our mortgage business, and it’s a great option for first-time homebuyers.”

Jeff Dilullo, Credit Administration Manager, of Mercer County State Bank – headquartered in Sandy Lake, PA – noted how easy it was to obtain approval to originate GRH loans. “The approval process for the Rural Housing program was really pretty simple, and our local USDA office was extremely helpful to us during the process,” says Jeff. “Once we were approved to originate and service government loans, we immediately began to realize the financial rewards this product offered us and the benefits it provides to our borrowers.”

For more information on the MPF Program, click here. To take advantage of this or any other MPF Program option, contact Jeff Acquafondata at 412-216-1637 or Peggy Stemmler at 412-288-7335.

DISCLAIMER
The information presented is not investment or business advice, nor is it an offer to extend credit or buy any security or financial product. Readers must not rely on any of this information when making any investment, business or credit decision. FHLBank products are governed by various agreements between FHLBank and its customers, as well as certain FHLBank policies and applicable regulations. In the event of any inconsistencies between information contained in this article and such agreements, policies and regulations, the agreements, policies and regulations will be determinative.

“Mortgage Partnership Finance" and “MPF” are registered trademarks of the Federal Home Loan Bank of Chicago.