MPF Announcement 2019-70

MPF Program Announces Updates to Minimum PFI Credit Enhancement Obligation

Effective Date: January 1, 2020

On December 3, 2019 the MPF Program published MPF Announcement 2019-62 which advised PFIs that due to recently issued regulatory requirements all new and amended Master Commitments (MCs) for risk-sharing products (MPF Original, MPF 35, and MPF 125) offered under MPF Traditional will be subject to a minimum PFI credit enhancement obligation.

Effective January 1, 2020 all new and amended MCs will have a set minimum PFI credit enhancement obligation of one percent (1%). Please note that MPF Traditional products that offer performance-based credit enhancement fees to PFIs (MPF 35 and MPF 125) will have a lower effective minimum due to the First Loss Account (FLA). These terms will not immediately apply to existing Master Commitments, but will be applicable when new Master Commitments are opened or existing Master Commitments are amended on or after January 1, 2020.

PFIs should contact their MPF Banks for additional details related to the minimum required PFI credit enhancement obligation for applicable MPF products.

Webinar

MPF National Education has recorded a webinar that provides additional information regarding these updates.  Please click here  or visit MPF National Education to register and view the on-demand webinar.