HSBC Bank USA of Buffalo and Provident Bank of Montebello, N.Y., have started to originate their home loans through the Mortgage Partnership Finance Program with the Federal Home Loan Bank of New York.

The program, a risk-sharing arrangement, lets lenders who are members of a participating Home Loan bank originate and service loans for which the Home Loan bank manages funding, interest rate, liquidity, and prepayment risks. Lenders do not pay guarantee fees to the Home Loan bank as they do when they sell to Fannie Mae and Freddie Mac, the two largest buyers of home loans in the secondary market.

The program, which was begun by the Federal Home Loan Bank of Chicago in June 1997, is in competition with Fannie and Freddie. The New York Home Loan bank started participating in April 1999 and has 13 lenders approved for partnership.

Elmira (N.Y.) Savings Bank, HSBC Bank USA, and Provident have already originated loans through the program and made commitments for more than $500 million of lending, a spokesman for the New York Home Loan bank said.

Nationally, the partnership program has $1.7 billion of outstanding loans and commitments, a spokesman for the Chicago Home Loan bank said, and it plans to lend $7 billion in the next seven months to a year.

The Home Loan banks of Indianapolis, Cincinnati, and Seattle are also developing programs, he said.

-Joshua Brockman

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