Mortgage Partnership Finance Program

The Mortgage Partnership Finance (MPF) Program, established in 1997, is a business-to-business partnership between Federal Home Loan Banks (FHLBanks) and local mortgage lenders (Participating Financial Institutions or PFIs). It serves as a secondary market for residential mortgages, allowing PFIs to sell their conventional fixed-rate and government-insured mortgage loans to their FHLBank. This model helps lenders manage liquidity, interest rate risk, and credit risk, while also providing a source of fee income. Unlike other secondary market models, the MPF Program involves a credit risk-sharing arrangement, which can provide better pricing to the lender. The program is administered by the Federal Home Loan Bank of Chicago on behalf of the entire FHLBank System.