Frequently Asked Questions

What is MPP?
MPP offers members of FHLBI an attractively priced alternative to other secondary market sales. With MPP, our members work with their local Federal Home Loan Bank rather than with a nationwide company. This provides the personal service that is helpful when selling loans, whether the member is a first-time seller or an experienced seller easing into a new program.

What types of mortgage loans is FHLBI purchasing?
FHLBI is purchasing conventional 15, 20 or 30 fixed-rate, fully amortizing
loans through MPP. The loans must meet agency-conforming size limits,
be in the name of the member prior to sale, and meet FHLBI's underwriting guidelines. You can obtain FHLBI's underwriting guidelines online by following this link: MPP guide.

Who is eligible to apply to MPP?
An institution must be a member of FHLBI to apply to the program.

Who services loans sold through MPP?
The member can choose to retain the servicing or sell the servicing to a servicer that is approved by FHLBI. This flexibility allows members to determine whether or not they wish to build a servicing portfolio or receive an attractive servicing release premium for the servicing. Regardless of whether or not the member sells the servicing, the member will still retain ownership in the lender risk account (LRA).

What is the lender risk account (LRA)?
The LRA is an account that is set up in the name of the member at FHLBI. It contains money that is set aside each month from the interest income stream of sold loans for expected losses. Should loans within an MCC (or pool) perform as expected, the member will receive proceeds from the LRA as payout over time. The LRA is a benefit to the member because it (along with the SMI) replaces the guarantee fee that is charged by other agencies. To find out more about how the LRA can add to your income over time, please contact your marketing representative.

What is the supplemental mortgage insurance (SMI)?
The SMI is additional insurance on the loans sold to FHLBI. It acts similarly
to pool insurance and works in conjunction with the LRA to cover any
potential losses.

Will I have to send payments in to the SMI and LRA each month for MPP?
No. Participating servicers send one payment in the form of monthly remittance to FHLBI each month. FHLBI takes care of paying any SMI premiums and transferring funds to the LRA on behalf of the members.

How does a member sell a loan to FHLBI?
FHLBI has a state-of-the-art Internet system that allows participating members to check pricing, commit individual or groups of loans, and deliver the loans over the Internet. Once the loan or group of loans has been delivered, the collateral file is sent to an FHLBI-approved document custodian for review. Once the loan files pass inspection by the document custodian, the member is funded on the funding date.

What does a member of FHLBI have to do in order to start selling mortgage loans through MPP?
Each member that wishes to participate in MPP must be approved. The application process begins by filling out the MPP application, which can be obtained online by following this link MPP application. Feel free to contact an MPP representative at (317) 465-0554 should you have any questions about
the application.

Once the application is submitted, an MPP staff member will visit your facilities to conduct an onsite interview and answer any questions that you have about MPP. Once approved for the program, an MPP staff member will visit your facilities for comprehensive training.

Updated:May 23, 2008