Member banks of the Federal Home Loan Bank System may soon be able to purchase mortgages from originators through a platform designed by Washington-based, secondary market Internet trading company Pedestal Inc.
The platform, called MPFLink.com, will enable participating financial institutions (PFIs) to link up with lenders and purchase loans that will be funneled into the FHLBanks' MPF Program. The company hopes to have loans begin selling on the service by the end of the month.
"It's a platform that probably - in a relatively short period of time - three PFIs want it, [and will be] posting prices for originators to sell loans to them [which will] ultimately funnel into the FHLBank program," said John Lewis, managing director of corporate communication for Pedestal. "We are in final negotiations with the first one, which we expect to complete and have up and running by the end of the month, with another one or two to follow shortly thereafter."
The company has stated that it has secured a licensing agreement with the Federal Home Loan Bank of Chicago, the creator of the MPF Program, but an MPF spokesman said that a licensing agreement has not been signed.
Despite that, Pedestal said that the platform is ready to launch, and "as soon as we got the last i's dotted and t's crossed on the contract with the first PFI, it's virtually a matter of hours for the program to be up and running," Lewis said. Because contracts have not been finalized, Pedestal could not release the names of the PFIs with which it is working.
Lewis also added that the three PFIs it is lining up may be all that is required to reach its goal of adding liquidity to the MPF market. "Our goal is to provide liquidity and competitive pricing for this product and if we accomplish that with three PFIs, which we may be able to do, then maybe that will be all, but we haven't made decisions on that."
Having this program would add to it's other online platforms, such as its whole-loan and to-be-announced mortgage-backed securities trading platforms. "We've got a customer base which would largely overlap with the natural customer base for the MPF program and for the PFIs," added Pedestal's Lewis.
Pedestal developed the technology to combat Fannie Mae and Freddie Mac's extensive online platforms. The FHLBanks have virtually no online presence, Lewis said. He added that pricing for MPF loans has been more favorable over Fannie Mae, Freddie Mac and Ginnie Mae executions over the past two to three months.