Standard and Poor's July 29 downgrade of CUNA Mutual Group Mortgage Insurance Company from A to BBB+ led in part to the Federal Home Loan Bank of Boston's decision to stop buying mortgages that have their primary insurance with CMG MI, according to a spokesman for the Bank.
The Bank announced the move, which takes effect October 19, on August 19.
Mark Zelermyer, vice president for corporate communications for the bank, said the rating drop had been part of the process the bank used to come to its decision and that none of the loans currently in the pipeline for sale would be effected. The October 19 effective date "should give our members enough time and notice," he said.
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Zelermyer explained the FHLBB joins with other federal home loan banks to use the Mortgage Partnership Finance program to buy mortgages from member financial institutions that may be too small to sell them on the broader secondary market.
Zelermyer reported that 134 of the bank's 461 member financial institutions participated in the MPF program in 2008 and that the bank purchased just over $620 million in mortgages. This was up sharply from the just under $179 million it purchased in 2007, a result the bank ascribed to marketing the MFP program more and a greater participation among member financial institutions.
CUNA Mutual Group has not yet commented on the Bank's decision.
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