WASHINGTON-In remarks to America's Community Bankers last week, Department of Housing and Urban Development Secretary Mel Martinez outlined a proposal to enhance homebuying opportunities through expanded FHA-backed adjustable-rate mortgage offerings. "By offering additional types of FHA-insured ARMs, tailored to the financial conditions and desires of the borrowers, we are creating more homeownership opportunities," he explained. "We estimate that as many as 40,000 families a year will choose these new adjustable-rate mortgages to finance their home purchases." The proposal, which is related to the administration's initiative aimed at increasing homeownership rates, states that the interest rate for 3-year and 5-year ARMs cannot change by more than 1% per year after the fixed-payment period is over, maxing out at 5% over the life of the loan. The maximums would be set at 2% annually on 7- and 10-year ARMs and 6% for the life of the loan. Currently, FHA-backed ARMs have only a one-year fixed payment period with a ceiling of 1% per year and 5% for the remainder of the loan. The proposal has a 60-day comment period. Martinez also discussed a HUD anti-predatory lending pilot program in Baltimore, Md., an area he said has many unscrupulous lenders. The department is trying to create a model there in partnership with the federal and state governments for other areas where predatory lending is prevalent. Additionally, he emphasized the need to preserve subprime lending and explained that HUD is working on earlier disclosures from mortgage brokers.