| PFI Conversation: Keeping Skin in the Game |
 Bank of Bennington, a member of the FHLBank Topeka, punches above its weight. Family-owned for 85 years, the bank has $65 million in assets and serves its Nebraska hometown of the same name as well as nearby Omaha. Despite its modest size, the bank has enjoyed a dynamic mortgage business since it began using the MPF Program in March 2009. MPF in Focus recently spoke with Bob Hoesing, Bank of Bennington’s Vice President of Mortgage Lending.
What were the circumstances that led you to begin using the MPF Program?
Bob: We have a network of other small community banks that participate in larger commercial loans. I was helping one of these participants get approved to do Federal Housing Administration loans, but they ultimately wound up helping us by giving us information on the MPF Program.
What are some of the benefits you’ve realized?
Bob: When we first entered the program, we sold everything servicing-released. But there was a lot of demand for local servicing—people are anxious for that community bank contact—so in November 2010 we started servicing loans and since then we’ve built our servicing portfolio to $66 million. The benefit of dealing with the MPF Program is greater flexibility and control over the process that comes from keeping skin in the game. Normally when banks sell loans, in theory there’s no liability going forward, but in practice they never know when they will be asked to buy a loan back for some unanticipated reason. So you do have risk; you just don’t know when it’s coming. And that buy-back risk contributes directly to the tremendous hassle within the loan process. But with the MPF Program, we retain some liability for every loan we put on the books and we can plan for that—I call it orderly risk retention. We have very competitive pricing, and we’re able to act much more quickly than our competitors—we can close a loan in two weeks if necessary.
How would you rate your experience with the MPF program?
Bob: I would rate it as excellent. There is a learning curve, but there’s a tremendous amount of help. The timely, personal service delivered by Dave Davis and his team at the FHLBank Topeka has made it fun, quite frankly. You don’t hear that word very often in the mortgage business, but the ability to control the process and lay things out ahead of time makes it fun for people to refinance or build a new house. | |
