 | David Gerritson
Vice President
Mortgage and Consumer
Lending Division
Fox Valley Savings Bank | Fox Valley Savings Bank (FVSBank)—a member of the Federal Home Loan Bank of Chicago with $331 million in assets and locations in Fond du Lac, Waupun, and Oshkosh, Wisconsin—has been a Participating Financial Institution (PFI) since the early days of the Mortgage Partnership Finance® (MPF®) Program. “We were one of the first members to use the MPF Program; we took out our first master commitment in July 1998, and I believe we were the 15th PFI,” says David Gerritson, FVSBank’s Vice President, Mortgage and Consumer Lending Division. MPF in Focus recently spoke with Gerritson about FVSBank’s relationship with the MPF Program and why it has remained strong for nearly 20 years.
Why did FVSBank start using the MPF Program, and why do you continue to use it today?
It gave us the ability to sell fixed-rate loans into the secondary mortgage market, with good pricing and the ability to service those loans to generate additional fee income.
In 1998, we didn’t have other secondary market options. Now, we do have the ability to sell directly to other investors, but we’ve always found the MPF Program to be a better fit for a couple of reasons: the ease of use of the entire program, from taking on a master commitment, to taking on a delivery commitment, to presenting a loan for funding, to the actual funding process; and how easy it is to work with the MPF Service Center—you can make a call and get immediate answers on anything from underwriting to origination to servicing.
Also, the MPF Program’s underwriting guidelines give us the flexibility we need to be competitive, which allows more people in our community to get into homes. The ability to offer fixed-rate loans at competitive pricing, together with the overall ease of use of the program, is truly an advantage.
Which product do you currently use most, and what value has it brought to FVSBank?
We currently sell loans under the MPF Original product, and a couple of benefits stand out for us in comparison with other investors. One huge benefit is the risk-sharing feature of the product, together with the FHLBank Chicago’s first-loss account, where the Bank sets aside a percentage of the balances of sold loans to offset future losses. Under this credit enhancement structure, we’re also paid a Credit Enhancement Fee to take on some of the risk for the loans we sell, so that’s another income generator for us.
As a member of the MPF Advisory Council, why do you think it's important for your institution and other PFIs to have a voice in the MPF Program?
We and other PFIs are the customers of the MPF Program, so they’re focused on us and what’s happening in our markets across the country. We can come to the MPF Program and say, these are the things we need—whether they are program issues, industry issues, or product opportunities—and then actually see those changes being made. It’s tremendous. They really do listen.
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