Freddie Mac To Buy OptionLoans
McLEAN, Va. - (06/06/05) -- Freddie Mac said it plans to startpurchasing option-adjusted adjustable-rate mortgages later thisyear as it tries to catch up with the market and the Wall Streetconduits These adjustable rate mortgages offer borrowers severalpayment options, including interest-only payments, to addressdifferent and changing needs. Option-ARMs are especially popular onthe East and West coasts and lenders are originating tens ofbillions of these loans each month, Freddie vice president JamesCotton said. "The street is telling us that?s where the ARM marketis going," he added. The secondary market agency plans to startpurchasing option ARMs in bulk by the end of the year. And it wantsto start buying loans on a flow basis in 2006. The Freddieoption-ARM will allow borrowers to chose from four payment optionseach time they write a monthly mortgage check. The first optionallows borrowers to make a minimum payment; a second option is aninterest-only payment; while the third and fourth options allowborrower to chose between a 15-year or 30-year fully amortizingpayment.