Effective January 1, 2020 the MPF Program has made updates to the determination of Master Commitment (MC) credit enhancement for all of the risk-sharing products (MPF Original, MPF 35, and MPF 125). As a result of this update, the PFI Credit Enhancement (CE) Obligation may be subject to an adjustment to meet regulatory requirements no later than 30 days after the MC has closed.
In addition, 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.
