TheMReport — News and strategies for the evolving mortgage marketplace.
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TH E M R EP O RT | 23 FEATURE getting recognized or getting value for loans they were originating or selling. Some of the pricing they received was ignoring the high-quality loans that they produced. "Think of us as standing in the middle for over 900 active loan sellers in the market who happen to be our members in the program. The typical community lending institution tends to be a smaller bank or credit union, that, in fact, if you looked at the numbers, about two-thirds of our members in the program are organizations whose total asset size is around $500 million or less. They tend to originate a handful of loans a month that they sell into the program," he said. In 2018, over 900 institutions sold loans to an FHLBank. "What we've done over the years is really try to keep that same principle in place of providing them with the best possible execution, leverage in us as a cooperative and our ability to price; that would then make them as competitive as anyone else in a market place that is doing a lot of volume," Schambow said. "Whether that's a nonbank or a large bank. It's all about making the smaller community institutions competi- tive in their local marketplace." In effect, FHLBank Chicago has become a catalyst for change for its members. "It's important that our products meet the needs of our members in the communities in which they serve," said Michael Ericson, EVP and Group Head Members and Markets, FHLBank Chicago. "We can tailor the products to our members from a community investment aspect, from an advances perspective, and from a lending perspective to support the financial institutions that support those communities. They're able to then work with their customer and borrower base in making sure that their institu- tion is more inclusive to the communities in which they serve." For community banks, increasing the market share translates to more volume, which in turn means that they get to distribute the cost base of the program over more transactions. "More volume is good for everybody that is in the program. In fact, one of the reasons you want to grow the program, is so that everyone has a lower per unit cost," Stocchetti said. And it is this commitment towards serving its members that drives Stocchetti and his team in all their efforts. "We're a cooperative. Obviously, we also want to make sure we're distributing cost properly and that we have a return for members. If you were to talk to my people here who support the MPF Program, they would tell you that I often say 'keep focused on the value that we're bringing to those community lenders and their customers. Their customers essentially are people like us, who are buying homes and raising families.' I think it's important to keep that in mind as well in terms of what it means as we're increasing value and volume," he said. This makes D&I literally part of FHLBank Chicago's business strategy. Business and Diversity T oday, FHLBank Chicago's Capital Markets Working Group has individuals representing multiple departments. One of this group's goals is to look at how FHLBank Chicago can expand its business with diverse dealers. Cedric D. Thurman, SVP, Chief Diversity Officer and John Stocchetti, EVP and Group Head of the MPF Program. Photos by: Ed Gordon