How the MPF® Program Keeps Community Banks Competitive

by Nathan Terwelp, Senior Vice President, Mortgage Lender, State Street Bank

Local banks stand apart from the competition by delivering personalized service and a strong commitment to our communities. State Street Bank is the oldest community bank in Quincy, Ill., serving the city and surrounding areas for 135 years. And for the past 27 years, we’ve been selling loans into the Mortgage Partnership Finance® (MPF) Program through our membership with the Federal Home Loan Bank of Chicago (FHLBank Chicago). The MPF Program helps us stay competitive and keep homeownership affordable for our customers. With the MPF Program, we’ve been able to:

Strengthen Customer Relationships

State Street Bank takes pride in providing the same financial solutions as larger lenders with the personalized service of a local community bank. We chose the MPF Program because we wanted a long-term fixed rate loan product that would give us the option to retain servicing. As a smaller community bank, it’s important for us to maintain customer engagement and relationships. If our mortgage borrowers have questions or need additional products and services, they know we’ll be there to help.

Offer Better Pricing (without Sacrificing Profitability)

Long-term fixed rate mortgages meet an important need in our communities. For many of our borrowers, a 2% rate increase could significantly impact their financial position, so the ability to secure a predictable monthly payment makes it easier to plan for long-term financial stability.

The MPF Traditional products not only offer competitive pricing on long-term fixed rate mortgages by not applying loan level price adjusters, but they also provide members  with an additional monthly revenue stream for sharing in the credit risk of those loans. With our record of sound underwriting and low delinquency, we’ve been able to offer advantageous rates while preserving long-term profitability.

 For low- to moderate-income borrowers, we can also combine MPF loans with FHLBank Chicago’s Downpayment Plus® (DPP®) Program, which offers down payment and closing cost assistance. Since 2001,  State Street Bank has disbursed $2 million  to homebuyers through DPP grants. This has made a huge impact for local borrowers, and it’s one more way we stand out in service to our neighbors.

Build a Reputation for Reliability

What really sets the MPF Program apart from other secondary mortgage market options is the customer service we receive. We never feel like we’re just a number. Anytime we have a question, we can pick up the phone or send an email to our representative or the MPF Service Center, and we know we’ll get a timely response.

That relationship gives us confidence that when we issue a pre-approval or commit to a loan, we’ll be able to see it through and provide consistent support to our customers. Over time, we’ve developed a reputation for reliability among prospective homebuyers and local realtors that has been instrumental to our growth.

Maintain the Advantage

The market for fixed rate mortgages will always be competitive. Fortunately, the MPF Program is constantly looking to the future, listening to members, and adapting their product offerings to meet lenders’ and communities’ needs. To learn how the MPF Program can help your bank stand out, visit fhlbmpf.com.