Freddie Mac expands mortgage products

This summer, the corporation will add a 40-year fixed-rate mortgage, 20 additional adjustable-rate mortgages and federally insured housing mortgage products to Loan Prospector, the company’s automated underwriting service and online selling system.

The company is also in the process of rolling out a comprehensive lineup of 40-year mortgage options, beginning with a standard 40-year fixed rate mortgage and a 40-year version of the Freddie 100 no-down-payment mortgage. By opting for a $200,000 40-year, no-down-payment Home Possible mortgage at today’s rates, for example, a borrower would need 3.5 percent less gross monthly income to qualify and enjoy a 4.5 percent cut in monthly housing payments, along with 5 percent more home-buying power versus a 30-year version of the same mortgage.

“This is just the beginning of a robust product strategy designed to give lenders a highly flexible array of 40-year products so customers can better match their home-buying ambitions with their financial circumstances,” said James Cotton, vice president of mortgage sourcing at Freddie Mac, in a news release.

Freddie Mac also is in the process of aligning its underwriting policies to accommodate recent property insurance deductible increases triggered by hurricanes in Florida and along the Gulf Coast.

Scheduled to take effect in July, the modification will increase the maximum deductible 2 percent to 5 percent for fire or wind damage coverage for one- to four-unit properties, condominiums and planned unit developments, as well as damage caused by water not related to flooding.

The changes are intended to help support the housing recovery efforts along the Gulf Coast. The higher deductibles are also expected to help borrowers lower their annual insurance premiums.

Freddie Mac estimates the lower premiums could generate enough savings to offset the higher 5 percent deductible within two to four years.

The changes were announced at the Mortgage Bankers Association’s National Secondary Conference in Chicago.