Pub. 6 2015 Issue 2

www.wvbankers.org 24 West Virginia Banker By Jeff Acquafondata, FHLBank Pittsburgh Grow Your Mortgage Revenue in the Secondary Market T he housing market is back. The number of home sales continues to rise across the United States, particularly in the Northeast region. Mortgage rates also remain at historic lows, making financing a home even more attractive to poten- tial homebuyers. The National Association of REALTORS® estimates in its 2014 Profile of Home Buyers and Sellers that those who financed a home purchase last year typically financed 90 percent of the home price. This trend is likely to continue throughout 2015, spelling more potential mortgage business for lending institutions. Selling mortgages to secondary market entities such as govern- ment-sponsored enterprises can benefit a lender by reducing the risk of carrying those loans on its balance sheet or even earning fee income for credit enhancement. Banks that sell mortgage loans can also choose whether or not to retain the loan servic- ing. This gives financial institutions additional flexibility based on operational capacity and desire to interact directly with the consumer. When evaluating mortgage-purchasing entities, West Virginia banks should look for a business partner that offers the following benefits: • Funding/hedging expertise • Additional products and services that could benefit your institution • Acceptance of a variety of mortgage loan types • Option to earn credit enhancement fees by sharing credit risk • Option to retain your relationship with the customer for cross-selling and future lending opportunities • Training for your staff • Same-day funding • An easy and convenient way to initiate and monitor activity, such as a transactional website You should also evaluate whether the secondary market entity has additional fees, such as guarantee or application fees, or loan-level pricing adjustments. Each mortgage program is unique, so research your options to find the one that best meets your institution’s needs. The FHLBank Mortgage Partnership Finance® (MPF®) Pro- gram has been helping member institutions with mortgage origi- nations since 1997. Today, the MPF Program includes more than 1,000 Participating Financial Institutions that have delivered over $200 billion in mortgage loans nationwide. West Virginia banks that belong to FHLBank Pittsburgh are eligible to participate in the MPF Program. For more information on how the MPF Program can help you, visit www.fhlb-pgh.com or call me directly at 412-216-1637. We look forward to working with you and your lending staff. n Jeff Acquafondata is a business development manager at FHLBank Pittsburgh with more than 15 years of experience in the mortgage industry. “MPF” and “Mortgage Partnership Finance” are registered trademarks of the Federal Home Loan Bank of Chicago.