WASHINGTON - The Federal Home Loan Bank of Chicago, which has been promoting its secondary mortgage market program as an alternative to Fannie Mae and Freddie Mac, announced it has agreed to sell loans under its Mortgage Partnership Finance program to Fannie Mae.
The deal comes as the Chicago FHLB has found itself stuck with some $32 billion of mortgages it acquired through the secondary market program, which has been competing with Fannie and Freddie for loans originated by banks and CUs. The Chicago Bank reported a $154-million loss for the first six months of the year as it struggled to hedge for its huge mortgage portfolio. The financial troubles killed a proposed deal to have the Chicago Bank merge into the Federal Home Loan Bank of Dallas.
Fannie Mae and its sister secondary market company Freddie Mac were taken over by the federal government last month and are currently being run under federal conservatorship.
The Chicago Bank created the secondary market program, which was adopted by most other FHLBs. The Chicago Bank not only bought mortgages from its bank and CU members, but also from the other FHLBs, and that's how it accumulated the huge portfolio of loans.(c) 2008 Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
