Prospect of Wider Access to Home Loan Banks Creates a Stir

Talk is percolating among mortgage bankers about the Federal Home Loan Bank System opening its doors to them.

The idea, discussed publicly at this week's convention of the Mortgage Bankers Association of America, could help the Home Bank system boost its activities in the face of dwindling thrift membership. And it would provide mortgage companies with a much-needed source of funding.

For the past several months, mortgage companies have complained that banks are denying them funds needed to support their own mortgage lending.

The Home Loan banks extend low-priced credit to member thrifts, banks, and credit unions.

|An Interesting Thought'

Making membership available to mortgage companies is "an interesting thought to some people," said Steve Britt, executive director of the Federal Housing Finance Board, which oversees the Home Loan banks.

However, Mr. Britt said the board has no plans to proceed with the issue. One potential stumbling block, he told convention delegates, is opposition from member thrifts and banks, which compete with mortgage companies.

Michael J. Ferrell, legislative counsel for the Mortgage Bankers Association, said at the conference that the Home Loan banks offer "all the things lenders like and enjoy" - a "tremendous source of funds at competitive rates."

Costs a Hurdle

He noted, however, that membership "might still be a little pricey for us."

Some small thrifts pay as much as $300,000 for their initial stock in the Home Loan system. As members increase their borrowing, they are required to buy additional stock.

In a related development, the Federal Home Loan Bank of Dallas - one of 12 banks in the system - has begun lending indirectly to mortgage companies.

Under its "third part participation program," the bank extends what is called warehouse credit to members, which in turn funnel the money to mortgage companies at a higher rate.

The Dallas bank's information booth at the convention exhibit hall was swamped with inquiries about the program.

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