A controversial mortgage pilot program run by the Federal Home Loan Bank of Chicago could soon go nationwide.
Citing increased demand by participating lenders, the Federal Housing Finance Board said Friday that it may let all 12 regional Home Loan banks participate in the Mortgage Partnership Finance program.
Under the year-old pilot, the Chicago Home Loan Bank funds and manages the interest rate risk of mortgages originated and serviced by participating lenders. Critics complain that the program could drive private lenders out of business. A lawsuit fighting the program was rejected in June, but an appeal was filed July 31.
The Finance Board's staff is drafting a proposal on the expansion and will accept public comments until Sept. 6. In addition to the question of expanding the program, the staff will consider whether its $750 million cap should be lifted, whether loans should be targeted to low- and moderate- income borrowers, and how to gauge the program's success.