Five Federal Home Loan banks have joined the Chicago district bank in its controversial pilot program to fund and hold mortgages.

The Federal Home Loan banks of Atlanta, Des Moines, Indianapolis, New York, and Pittsburgh will fund and manage the interest rate risk of home mortgages originated by participating lenders under the Mortgage Partnership Finance program. The lenders, which must be members of the Federal Home Loan Bank of Chicago, service the loans and hold reserves against credit losses under the $750 million program.

"Participation ... by five additional Federal Home Loan banks shows a gratifying level of system support for the MPF pilot and its potential," Federal Housing Finance Board Chairman Bruce A. Morrison said in a prepared statement Friday.

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