FHLB To Exit Secondary MortgageMarket
SEATTLE - (03/04/05) -- The Federal Home Loan Bank ofSeattle said it plans to end its participation in the home loanbanks' secondary mortgage market program, which the Seattle bankcalls the Mortgage Purchase Program, as part of a capitalenhancement plan approved by its regulator. The Seattle bank wasone of the leading advocates of the secondary market program whichhas become an emerging competitor to Fannie Mae and Freddie Mac.The nine of the 12 home loan banks that operate some form of thesecondary market program held a total of $112 billion in bank andcredit union mortgages at year-end, compared to $1.5 trillion heldby Fannie and Freddie. Under the capital plan, the Seattle bankwill refocus on its traditional mission of providing advances, orlow-cost funding, to its members to finance housing and will nowallow members to use all of their existing stock to secureadvances. Up till now only a portion of stock, membership stock,could be used as security. The Seattle bank has 374 members,including 79 credit unions.