Federal Home Loan Bank of Boston’s Mortgage Partnership Finance® (MPF®) Program
The MPF Program allows Federal Home Loan Bank of Boston (FHLBank Boston) members to sell residential mortgages directly to FHLBank Boston. As market dynamics change, members may decide to sell mortgages to free up cash for alternative investments, and the MPF Program can help support this strategy by offering options for both seasoned and current loans. Selling mortgages to the MPF Program is easy, and FHLBank Boston staff provide all the training and support you will need when preparing to sell.
As in typical sales transactions, a price is paid at delivery. However, unlike other sales transactions, members participating in MPF, known as Participating Financial Institutions (PFIs), maintain some underlying credit exposure to loans sold – a Credit Enhancement (CE) Obligation. In exchange for sharing some of the risk, the PFI is paid CE income over the life of the loan. This has the potential to increase the all-in return on the sale of the loans. Plus, the MPF Program requires no loan level price adjustments (LLPAs) and no minimum deliveries.
To further support PFIs and expand affordable homeownership opportunities for their customers, FHLBank Boston launched an innovative pilot program through MPF – Permanent Rate Buydown – in 2024. The Permanent Rate Buydown product enables PFIs to reduce the mortgage interest rate by up to two percentage points on purchase transactions to borrowers earning up to 80% of area median income. FHLBank Boston pays the PFI a premium of 1.5% on loans sold through this product using a voluntary subsidy to make up the difference between a below-market rate loan and the 101.50 price. The product is available until the subsidy is fully allocated in 2025.
The Permanent Rate Buydown product was a tremendous success, resulting in 265 loans totaling $72 million sold to FHLBank Boston in 2024, helping lower-income borrowers save thousands of dollars in principal and interest payments with a below-market interest rate.
For more information about Permanent Rate Buydown or the MPF Program, please contact MPF Program Manager Jennifer Cowles or your FHLBank Boston relationship manager
“Mortgage Partnership Finance,” “MPF” and “MPF Mortgage Partnership Finance” logo are registered trademarks of the Federal Home Loan Bank of Chicago.