The Federal Home Loan Bank of New York announced Tuesday that it has joined the alternative secondary market program started in 1997 by the Federal Home Loan Bank of Chicago.

The move brought to four the number of Home Loan banks participating in the Mortgage Partnership Finance program, under which they buy mortgage loans from member banks. The others are in Dallas, Atlanta, and Chicago.

Joining the program "gives our members a fresh alternative and builds our core competitive advantage, and that is providing the funding," said Alfred A. DelliBovi, president of the New York bank.

The announcement was made at its regional stockholders meeting. Member banks are in New York, New Jersey, Puerto Rico, and the U.S. Virgin Islands. The larger members include Dime Bancorp, M&T Bank Corp., and HSBC.

Mr. DelliBovi said the program has already funded two loans from a New York member-Elmira Savings and Loan.

Tuesday was the second day of the Mortgage Bankers Association's national secondary conference in New York. Mortgage bankers have expressed uneasiness about the increasing influence of the two main secondary buyers, Fannie Mae and Freddie Mac.

The program offers large and small savings institutions and commercial bank lenders that are members of a Home Loan bank an alternative to selling loans to Fannie Mae or Freddie Mac or to holding loans in portfolio.

"We're very interested" in the expanded mortgage partnership plan, said Paul S. Reid, executive vice president of the trade group. "It's another outlet for our members.

"Competition always, we think, brings better efficiencies than a purely regulated market," he said.

The level of outstanding loans from the program stands at $1.14 billion, said Alex J. Pollock, president and CEO of the Chicago Home Loan Bank.

Lenders maintain the customer relationships, servicing, and retain credit risk during the life of the loan. A Home Loan bank owns the mortgages after they are created and holds them in portfolio while managing funding, interest rate, liquidity, and prepayment risk.

Terry M. Buhler, vice president for the secondary market at Anchorbank in Madison, Wis., said the program offers a "pricing advantage in the sale of the loan in the secondary market." Another advantage, he said, is that the credit-enhancement fees that come to the local lender "are a portion of the guarantee fees that would normally go to the agencies."

Anchorbank participates in the program through the Chicago Home Loan Bank. .

The average loan in the program is $94,000, representing "a middle America loan, which is right where we wish to be," said Mr. Pollock of the Chicago Home Loan Bank. Loans of up to $240,000 for a single-family home- the same limit set by Fannie and Freddie-are eligible for the program.

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