WASHINGTON – The Federal Home Loan Bank of Seattle, one of 12 regional institutions that provide money to home lenders, is seeking to branch into the turf of mortgage-finance giants Fannie Mae and Freddie Mac.
The bank announced Monday that it has asked federal regulators for permission to begin buying mortgage-backed securities from the banks and thrifts in the Northwest that collectively own it, and selling them to those financial institutions and other investors.
If approved by the regulators, the plan would put the Seattle bank in close competition with Fannie Mae and Freddie Mac, the huge government-sponsored companies that buy home loans from banks and other lenders and bundle them into securities for sale on Wall Street. Unlike them, however, the Seattle bank would not guarantee payments on the securities.
The plan, called MortgageChoice, would help home buyers by lowering interest rates through enhanced competition and would enable the Seattle bank to more effectively manage its financial risk, the bank said.
“The Federal Home Loan Banks are always looking for ways to provide more opportunities for consumers, who are working with member community banks, to afford a home of their own,” Norman Rice, president and CEO of the Seattle bank, said in a statement. “With MortgageChoice, the Seattle bank will be able to provide more choice and flexibility in the marketplace, which will help reduce the costs of mortgages for consumers.”
Carter Wood, a spokesman for the Federal Housing Finance Board, said Monday that the application made on July 20 was being reviewed by the agency.
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