Technology

Money, Meet Mouth: Freddie to Buy $20 Billion in Subprime Loans 

Editor’s update: Perhaps the best analysis of this I’ve seen of this news is over at Calculated Risk. Be sure to read what’s been written over there to get some perspective on this, especially if you work in the mortgage industry. Freddie Mac (NYSE: FRE) said Thursday that it will purchase $20 billion in fixed-rate and hybrid ARM products in an effort to provide lenders with more choices to offer subprime borrowers. The products, currently under development by the GSE and slated to be introduced by mid-summer, will limit payment shock by offering reduced adjustable rate margins, longer fixed-rate terms, and longer reset periods, the company said. The $20 billion commitment was made Thursday by Freddie Mac Chairman and CEO Richard F. Syron at the Homeownership Preservation Summit convened by Sen. Christopher J. Dodd (D-CT) and attended by Sen. Richard Shelby (R-AL).