CHICAGO - The Federal Home Loan Bank System's Mortgage Partnership Finance said the outstanding balance of loans held in portfolio grew 760% in 2000, to $15.4 billion.

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

Developed and run by the Chicago Home Loan Bank, this alternative to Fannie Mae and Freddie Mac lets Federal Home Loan banks buy loans from member institutions and manage the interest rate, funding, liquidity, and prepayment risks, much like Fannie and Freddie. But unlike Fannie and Freddie, which assume the credit risk, the Home Loan banks leave the risk with the lenders, which consequently pay no guarantee fees.

The program is available to member banks through nine of the 12 Federal Home Loan banks. The Chicago bank said another Home Loan bank is negotiating with the Federal Housing Finance Board, the Home Loan banks' regulator, to join.

The median size of a Mortgage Partnership Finance loan is $104,037, the Chicago bank said.

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