MPF® Original product allows you to earn additional income based on the performance of your loans by sharing in the credit risk associated with home mortgage finance. With MPF Original, you can originate, sell, and service fixed-rate, residential mortgage loans. FHLBank San Francisco manages the liquidity, interest rate, and prepayment risks of the loans while you manage the credit risk of the loans.
What makes MPF Original unique?
- Risk Sharing
With MPF Original, you have added security against loan losses. After borrower equity and private mortgage insurance (PMI), MPF Original offers an additional layer of loss protection called the First Loss Account (FLA), which is absorbed by FHLBank San Francisco.
Here’s how FLA works:
Under MPF Original the monthly accrual rate of the FLA is 4 basis points (0.04%) annualized. The FLA starts at zero and builds over time, calculated and accrued monthly, on the outstanding principal balance of the loans in a Master Commitment.
- Credit Enhancement
Credit Enhancement provides credit support after the FLA and is determined based on the delivered loan characteristics. Under MPF Original the Credit enhancement fee is not performance-based.
- Economic reward for quality loans
- Credit enhancement fee income, paid monthly
- No secondary market fees
- No agency Loan Level Price Adjustments (LLPAs)
- Same-day delivery and funding
- High-balance pricing available