CE Estimator: An  Easier Way to Manage Your Pipeline

Participating Financial Institutions (PFIs) examining the potential credit enhancement (CE) obligation for a loan or batch of loans they are considering for sale under the MPF Traditional risk-sharing products have a new alternative to the loan presentment options available on eMPF®. The MPF Program has created the CE Estimator tool to provide PFIs with an easier way to obtain estimated loan-level CE amounts (as well as indicative pricing, if desired), using just 20 data points.

Aiming to strike the right balance between ease of use and reliability of results, the new tool requires only the 20 most influential loan data characteristics to render a reasonably accurate estimate of the CE amount. Further, the simplified file design allows PFIs to experiment, varying loan characteristics to gauge the credit risk under hypothetical loan scenarios. What if something about the loan changes—for example, if the borrower decides to put 20% down instead of 25%? What if the FICO score is higher than expected? The CE Estimator allows PFIs to easily estimate the credit enhancement any number of times, using any combination of variables.

Important Considerations

The new CE Estimator is designed to facilitate pre-loan sale decisions. Because this tool doesn’t require all of the data points involved in the full loan presentment, it can only provide an estimate of the actual CE obligation. Also, receipt of an estimated CE amount from the tool should not be viewed as a confirmation of loan eligibility. MPF Program loan funding and actual CE amounts can only be obtained through the full loan presentment process. Please consult the MPF Guides or contact the MPF Service Center for questions related to loan eligibility.

Make Informed Choices with Less Data

To access the tool, visit the eMPF website, choose the “Transactions” tab, and select “Credit Enhancement Estimator” from the drop-down menu. On the Credit Enhancement Estimator page, you can submit a CE Estimator (CSV format) file including the 20 data fields necessary to approximate the CE amount. Within seconds, you’ll be able to view your results via email or under the “Reports” tab on eMPF.

The CE Estimator file layout, the template, and a sample file can be downloaded from the “Selling” section under the eMPF “Exhibits” tab or from www.fhlbmpf.com, and the data for the file can be entered manually or extracted by the PFI’s loan origination system. If you have questions about the new CE Estimator tool, contact the MPF Service Center at 877-345-2673 or mpf-help@fhlbc.com.
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Federal Home Loan Bank
of Chicago
200 East Randolph Drive
Chicago, IL 60601
Phone: 877-463-6673
www.fhlbmpf.com

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This newsletter contains forward-looking statements which are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as "anticipates," "believes," "expects," "could," "plans," "estimates," "may," "should," "will," or their negatives or other variations on these terms. We caution that, by their nature, forward-looking statements involve risk or uncertainty, that actual results could differ materially from those expressed or implied in these forward-looking statements, and that actual events could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, the instability of the credit and debt markets, economic conditions (including effects on, among other things, the housing market), changes in mortgage interest rates and prepayment speeds on mortgage assets, our ability to implement new or enhanced products or programs, and the risk factors set forth in our periodic filings with the Securities and Exchange Commission, which are available on our website at www.fhlbc.com. We assume no obligation to update any forward-looking statements made in this newsletter.
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