FHLB Mortgage Programs Stand to Gain from Topeka’s New Approach
By Brian Collins
The regulator for the Federal Home Loan banks may have given their mortgage purchase programs a significant boost by allowing the Topeka bank to sell participations in newly issued pools of mortgage loans. The Federal Housing Finance Agency gave the Federal Home Loan Bank of Topeka approval last week to allow members to invest in mortgage assets that are part of the Mortgage Partnership Finance program. The approval would allow banks and credit unions who belong to the Topeka bank to have an additional mortgage investment opportunity beyond Fannie Mae and Freddie Mac mortgage-backed securities. It also gives the Topeka Home Loan Bank new business opportunities. The Topeka bank is currently lining up members and would like to launch the loan participation program this summer. Hess said that new participation program is also generating interest at other Home Loan Banks. Analysts said the move helps address constraints at the Topeka Home Loan Bank. “It appears to us to be a carefully-crafted effort at solving the challenges of a small, heartland Home Loan Bank dependent on the increasingly flagging fortunes of rural community banks,” wrote Federal Financial Analytics in a note to clients last week. “From the Topeka Bank’s perspective, this offers the potential for new business not just for advances, but possibly other products to new or existing members.”