NEW YORK -- The Federal National Mortgage Association said it will buy or exchange for its mortgage-backed securities $5 billion of mortgages originated by Norwest Mortgage Inc. over the next 12 months.
The loans include 20-year mortgages, which the Norwest Corp. subsidiary is promoting. Norwest Mortgage is based in Des Moines and serves 48 states.
Norwest said most mortgages originated under the mandatory delivery agreement will be exchanged for securities issued by Fannie Mae, with the remainder sold to Fannie Mae for cash.
"Commitments like this allow us to continue providing financing to a wide range of homebuyers," said Mark Faris, Norwest Mortgage senior vice president. "We are particularly pleased with Fannie Mae's support for development of a 20-year mortgage loan."
The product "gives thousands of Americans the opportunity to build home equity faster than a 30-year mortgage but without the extreme payment differential of a 15-year mortgage," Mr. Faris said.
Over the past two years, Norwest, one of the top mortgage banks, and Fannie Mae have entered agreements affecting more than $10 billion in loans, said John R. Hayes, senior vice president of Fannie Mae's midwestern regional office in Chicago.
In addition to the 20-year mortgage, loan types to be originated under the agreement include 15 -and 30-year fixed-rate mortgages as well as adjustable-rate mortgages.