The Federal Home Loan banks' mortgage partnership finance program set a record in the first half of the year, with $10.2 billion of loans outstanding as of June 30, up 469% from the end of last year.

The program also has commitments to buy $95 billion of loans from lenders.

Mortgage partnership finance got a boost recently when the Federal Housing Finance Board, the Home Loan banks' regulator, made it permanent and lifted a $9 billion cap on loan purchases.

Alex J. Pollock, president and chief executive officer of the Chicago Home Loan Bank and the program's architect, said that lifting of the cap was "a nice birthday present." The program was begun three years ago last week.

Developed and run by the Chicago bank, the program is a secondary market alternative to selling loans to Fannie Mae or Freddie Mac. It uses an innovative risk-splitting plan that the system says offers lenders a better deal than Fannie and Freddie.

Mortgage partnership finance is available to lender members of the Federal Home Loan banks in 34 states and the District of Columbia through eight of the Home Loan banks. Two additional banks are seeking regulatory approval to join.

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