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Funding-Strategy Models


MPF Direct™ is a high-balance loan product that partners the MPF® program with Redwood Residential Acquisition Corporation (Redwood Trust), a real estate investment trust located in Mill Valley, California. This unique partnership offers Federal Home Loan Bank Participating Financial Institutions, or PFIs, the opportunity to access private capital when they sell their fixed-rate mortgages into the secondary market, leveraging their FHLBank membership to obtain liquidity for loans up to $1.5 million.

The MPF Direct product benefits PFIs that want to:

  • Offer competitive fixed-rate high balance residential mortgage loans to their borrowers without metropolitan statistical area (MSA) restrictions
  • Sell the servicing rights
  • Receive very attractive all-in pricing (asset price + servicing released premium)
  • Continue the ability to cultivate and/or maintain relationships with their customers, and;
  • Transfer the interest-rate, prepayment, and credit risks of the high balance loans to an investor

With no retained credit risk on loans sold under the MPF Direct product structure, PFIs have no risk-based capital or credit risk collateral requirements.

Features of the MPF Direct product are:

  • Maximum LTV: 80%
  • Loan Limits: up to $1.5 million; limits are adjusted for high-cost areas
  • Occupancy: Owner-occupied and second homes
  • Property Type: 1 or 2 units
  • Delivery Commitment: Best efforts
  • Remittance: Servicing released only
  • Master Commitment Size: $10 million minimum

PFIs that want the advantages of the MPF Direct product must obtain specific approval from FHLB Boston. Contact your secondary market sales manager or your relationship manager for more information.

About Redwood Trust

Redwood Trust primarily invests in residential mortgage loans, commercial loans and other forms of commercial real estate financing, and in securities collateralized by real estate loans. Their investments in residential mortgage loans are generally made with a view towards securitizing those loans.

The MPF Program is not providing accounting or legal advice with respect to the accounting treatment of MPF program assets and liabilities. The participating member is expected to consult with its own accountants and attorneys for advice on this matter.

"MPF" is a registered trademark of the Federal Home Loan Bank of Chicago. The "MPF Mortgage Partnership Finance" logo, and "MPF Direct" are trademarks of the Federal Home Loan Bank of Chicago.




















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