Freddie Mac has launched a major subprime mortgage program by purchasing and guaranteeing $227 million of loans originated by a unit of First Union Corp.

Under the new program, Freddie Mac's guarantee, which gives mortgage securities a triple-A rating, will be applied to as many as 40,000 subprime mortgages this year. The deal last week with First Union marked the government sponsored enterprise's first significant foray into a line of business that it has tiptoed around for the past year.

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