CHICAGO — The Federal Home Loan Bank System’s innovative Mortgage Partnership Finance program said last week that the outstanding balance of loans held in portfolio through it grew 600% from January through September, to $14.1 billion.

The secondary-market loan purchasing program, which was started in 1997, expanded this year into buying low-income FHA and VA loans. It also buys conventional loans.

Developed and run by the Chicago Home Loan Bank, the program is an alternative to Fannie Mae and Freddie Mac as a secondary-market buyer of loans. It lets Federal Home Loan banks buy loans from member institutions and manage the interest rate, funding, liquidity, and prepayment risks, much as Fannie and Freddie do.

But unlike Fannie and Freddie, which assume the credit risk, the Home Loan banks leave it with the lenders, which consequently pay no guarantee fees.

The program is currently available to member banks in 36 states and in Washington, D.C., through nine of the 12 Federal Home Loan banks. The Chicago bank said that one other Home Loan bank is currently negotiating with the Federal Housing Finance Board, the Home Loan banks’ regulator, to join the program.

The median size of a Mortgage Partnership Finance loan is $103,398 the Chicago bank said.

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