FHLB Option: Loans Originated for Sale
Many depositories are struggling with rate-setting issues for loans originated for sale in the secondary market. The starting point for rate-setting is the expected price of the loans when they are sold in the secondary market. Fannie and Freddie mortgage programs are the usual choices for lenders selling new production. Accordingly, their programs do not usually need much explanation. In contrast, the FHLB program is not as well understood. The FHLB programs can be a good option for some lenders, which is why today’s Comments will focus on their programs.