Fannie Mae last month sent a warning to the Federal Home Loan banks that it intends to protect its secondary market turf.

At a closed-door session in Washington, Fannie Mae's chairman told the Council of Federal Home Loan Banks that Fannie wants their fledgling Mortgage Partnership Finance Program to be subject to the same regulations it must obey.

"The rules established by Congress for secondary mortgage market participants in 1992 must also apply to any new participants," chairman Franklin D. Raines said, according to a transcript provided by Fannie Mae.

The company, which is the biggest buyer of home loans, boasts one of the most effective lobbying forces in Washington. Mr. Raines' remarks were seen as a sign that he takes seriously the competitive threat from the new program and will lobby for a level playing field as the Home Loan banks expand their loan purchasing.

Alex J. Pollock, president of the Chicago Home Loan Bank, said Mr. Raines did not refer to the program by name. That was an indication that "they don't like competition from MPF," he said. "We consider that to be highly flattering."

John vonSeggern, the council's executive vice president, said the Home Loan banks are moving to join the Mortgage Partnership Finance Program because "their membership is encouraging them to move in that direction."

The finance program - in which the Home Loan banks buy the interest rate risk of loans - has been gaining some momentum. Four banks-in New York, Dallas, Atlanta, and Chicago-now offer member institutions this alternative to selling loans to Fannie or Freddie Mac or to holding loans in portfolio. By April, $1.14 billion of loans had gone through the program.

Though Mr. Raines said that Fannie is "supportive" of the Home Loan bank system's role in providing liquidity to member banks, he said the effort to enter the secondary market amounts to a "big change."

Whether to let the banks continue this effort "is a decision that we believe Congress will ultimately need to make," Mr. Raines said. He called it "unlikely" the Home Loan banks would be able to move into the secondary mortgage market without "regulatory changes in capital and other standards."

Mr. Raines cautioned that secondary market rules and guidelines "could affect the economics of your advance business" and could "alter the economics of holding the stock of a Home Loan Bank in a member's portfolio."

Applying congressional standards to the Federal Home Loan Bank System would require a safety-and-soundess regulator other than the Federal Housing Finance Board; the establishment of Department of Housing and Urban Development percentage-of-business housing goals to reach low- and moderate-income borrowers, underserved areas, and special affordable housing; payment of federal income taxes; and meeting the same risk-based capital standards, Mr. Raines said.

"If the proposition is that all housing GSEs should have the same capital requirements, regulation, taxation-I think that's an extremely good idea," said Mr. Pollock of the Chicago Home Loan Bank.

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