An Innovative Solution

The Global Mortgage Alliance program addresses the challenges that continue to limit the growth and success of FHLBank mortgage acquisition programs. GMA benefits both FHLBanks and their member community banks, which generally do not have the scale and market presence to participate in the secondary mortgage market in a cost effective manner.

The GMA program greatly expands the capacity of members to further develop housing markets within their respective communities, and build on the close relationships between the FHLBanks and their members to provide a secondary mortgage liquidity facility that is robust enough to accommodate FHLB member's loan production.

GMA is designed to optimize participant's core competencies:

FHLBank members are highly skilled at marketing to, and assessing the credit worthiness of their customers;

FHLBanks are accomplished at serving their members and providing the necessary systems and operations support for mortgage programs;

GMA provides an opportunity for members to sell ongoing originations without a requirement that the Bank or member retain credit, prepayment or interest rate risk, as is currently required under the existing mortgage programs; and

Capital markets are better suited to distribute and manage the interest rate and credit risk of mortgages.

The proprietary loan delivery system ("e-GMA") utilized in GMA provides the mechanism for the collection of extensive data elements concerning the underlying residential mortgage loans. This feature, in conjunction with the analytical and surveillance system employed by GMA will provide investors in GMA securities with information historically not available from other mortgage securitization programs, thereby enhancing market acceptance of a new class of mortgage securities. Cognizant of current market dislocations related to questionable mortgage lending practices, GMA underwriting guidelines ensure the continuation of the remarkable credit experience afforded by FHLBank mortgage programs.

GMA will not participate in any other banking business, unlike other large aggregators and will not cross-sell to member's bank customers (home equities, boat loans, refinance, etc.) which permit members to preserve their customer relationships. Rather than using an implied government guarantee to borrow funds in the capital markets to support existing mortgage programs, FHLBanks, in a unique network alliance with GMA, will facilitate the transfer of funds from the global markets to thousands of community mortgage lenders across the US.