WASHINGTON — The Federal Home Loan Bank of Chicago said Tuesday it has issued its first Ginnie Mae mortgage-backed security, which it says will give community banks and other system members an easy way to securitize government guaranteed loans.

The first $5 million Ginnie MBS issued via the Chicago bank's Mortgage Partnership Finance program included Federal Housing Administration, Veterans Administration and Rural Housing Service guaranteed loans. Over half the pooled loans were RHS loans.

"This is an important milestone for the MPF Program," said Matt Feldman, president of the Chicago Federal Home Loan Bank. "Ginnies are among the most liquid financial instruments in the world, and this new product allows us to enable FHLBank members to offer competitive FHA, VA, and Government Guaranteed Native American and Rural Housing mortgages."

There are 10 other Home Loan banks, but so far only the Atlanta FHLB has been approved to participate in Chicago's MPF Ginnie Mae MBS program.

"Our shareholders can sell one loan at a time or in bulk into the program," said Sharon Cook, a spokeswoman for the bank. "This is a great opportunity for smaller lenders to access the secondary market in a cost effective way."

The MPF Ginnie Mae program will enable "community based financial institutions to "effectively compete with the mega banks for homebuyers in their communities," said Ginnie Mae President Ted Tozer. "Now they can connect directly to the capital markets, improving the home financing options they can offer to their customers without the burden of having to individually obtain and maintain Ginnie Mae approval."

The Chicago Home Loan Bank launched the MPF program back in the 1990s. It announced the start of the Ginnie Mae MBS pilot program in 2013.

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