WASHINGTON Community banks will be able originate and sell jumbo loans with balances as high as $1.5 million under an expansion of a conduit program the Chicago Home Loan Bank has forged with Redwood Trust.
The previous jumbo loan limit for Chicago's Mortgage Partnership Finance Direct program was $729,750.
"The increase in the MPF Direct product's loan limit is intended to help members that operate in urban or other areas where home prices are higher than the national average," said John Stocchetti, an executive vice president at the Chicago bank and group head of the MPF program.
A handful of Chicago Home Loan Bank members began selling jumbos via the MPF Direct program to the Redwood real estate investment trust, which is based in Mill Valley, Calif. Redwood securitizes and sells jumbos in the private-label securities market.
The Boston, San Francisco and Atlanta Home Loan banks have also received Federal Housing Finance Agency approval to participate in the MPF Direct program. Other Home Loan banks are in the process of obtaining regulatory approval to participate, according to Eric Schambow, a senior vice president at the Chicago bank.
He noted that some Boston Home Loan Bank member institutions started training in May to sell jumbos via the MPF Direct program.
"We will be working with Atlanta and San Francisco when they roll out their products next," Schambow said.