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Freddie Mac to Stop Buying Some Subprime Mortgages

Freddie Mac is putting an end to purchasing subprime mortgages that have a high likelihood of excessive payment shock and possible foreclosure.

By Staff Writer | Updated on March 06, 2007

McLEAN, Va. — Freddie Mac is putting an end to purchasing subprime mortgages that have a high likelihood of excessive payment shock and possible foreclosure.

Under the new plan, Freddie will only buy subprime adjustable-rate mortgages–and mortgage-related securities backed by these subprime loans–that qualify borrowers at the fully-indexed and fully-amortizing rate. The effort comes as Freddie moves to protect future borrowers from the payment shock that can occur when adjustable rate mortgages increase.

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