Pedestal Inc., the online mortgage trading network, said Cenlar Federal Savings Bank will be the first lender to use MPFLink.com to funnel loans to the Federal Home Loan Banks.

A spokesman for Washington-based Pedestal said Tuesday that Cenlar could buy its first loan using the Web site within a week.

Cenlar, a wholesale bank in Ewing, N.J., will use MPFLink.com to buy loans from correspondents and then sell them directly to the Federal Home Loan Banks' Mortgage Partnership Finance program. The bank, a unit of Cenlar Capital Corp. of Trenton, N.J., will retain the loans' servicing rights.

MPFLink.com provides a three-way connection between mortgage banks such as Cenlar, their correspondents, and Mortgage Partnership Finance, the Home Loan Banks' alternative secondary marketing program.

Pedestal is in discussions with at least two other lenders and many potential correspondents, the spokesman said.

MPFLink.com is designed to give lenders participating in Mortgage Partnership Finance access to more originators and to simplify trading for all involved by eliminating fax and phone contact.

The site also makes loan prices more transparent, the Pedestal spokesman said: Every participating company sees the same price, and that helps to prevent discrimination against smaller companies that deliver less volume.

MPFLink is a boon to lenders such as Cenlar, the spokesman said, because they can use it to conduct electronic transactions with correspondents without having to invest in technology. It also spares them some hiring, he said, because marketing to potential correspondents is handled by Pedestal.

Fannie Mae and Freddie Mac, the Home Loan Banks' chief competitors in buying mortgage loans, have a strong Internet presence.

Mortgage Partnership Finance, a three-year-old program developed and run by the Chicago Home Loan Bank, has a unique risk-splitting feature: The lender keeps the credit risk on a loan and the Home Loan Bank takes on the prepayment and interest rate risk.

Though it purchases fewer loans than Fannie and Freddie, Mortgage Partnership Finance is poised for major growth. In the first half its volume of loans outstanding was $10.8 billion, up 496%.

The program buys conventional, FHA, and VA loans. Much of its growth has been in FHA loans, which it started buying in January - taking a big chunk of Ginnie Mae's share of that market.

Fannie Mae has indicated that it considers the program a real competitor. Franklin Raines, Fannie's chairman, in May recommended that the Home Loan Banks be subjected to the same risk-based capital standards as Fannie and Freddie, which he said are much stricter than the standards for banks.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.