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The bank is piloting one conduit for jumbo mortgages and another for Ginnie Mae-eligible loans.
December 24
WASHINGTON The Federal Home Loan Bank of Chicago is on track to issue its first Ginnie Mae mortgage-backed security this summer.
The pool of government-insured single-family loans originated by a handful of Chicago bank members will total less than $10 million. But it will represent a milestone for the Home Loan bank, which has been working on the securitization program for over two years.
"We are finishing up the details for the securitization," John Stocchetti, an executive vice president at the Chicago bank, said in an interview.
He indicated they could be ready to issue their first Ginnie MBS in June but it is more likely to be issued early in the third quarter.
The Chicago Home Loan Bank plans to do a few more small securitizations in the pilot phase before opening the securitization program to members at the other Home Loan banks.
The Atlanta Home Loan Bank has already received Federal Housing Finance Agency approval to participate in Chicago's Government Mortgage Partnership Finance program, according to sources. The Des Moines and Boston Home Loan banks are seeking FHFA approval, sources said.
The Atlanta and Boston Home Loan banks did not respond to requests for comment, while the Des Moines bank declined to comment.
"There is a lot of interest throughout the whole FHLB System to really get in and get going now that they are going to have this first security," Ted Tozer, Ginnie Mae's president, said in an interview.
That will result in more geographically diverse MBS, he said.
The conduit is designed to give community banks and credit unions direct access to the secondary market as opposed to selling their Federal Housing Administration, Department of Veterans Affairs and Rural Housing Service loans to larger competitors and other aggregators.
The Chicago Home Loan Bank will be the Ginnie issuer for all the participating Home Loan Bank members. "Chicago is going to run one pipeline for the whole" Home Loan Bank System, Tozer said. It will also be the master servicer.
During the pilot phase, participating Chicago members are required to retain the servicing. But that could soon change.
"We intend to offer a servicing-release option later this year," said Eric Schambow, director of the MPF Program.
The Chicago bank pioneered the MPF program in the 1990s. Ten 10 of the 12 regional Home Loan banks participate.
