United Guaranty Residential Insurance Co. is joining the list of mortgage insurers to offer insurance for laons with 3% down payments.

The Greensboro, N.C.-based company plans to begin offering the product by July 1.

Lack of support from the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. for 3%-down loans will still limit the scope of the program, however.

Currently Fannie Mae has a pilot program to do such loans with GE Mortgage Insurance Co. and Freddie has declined to buy any 3%-down loans.

United Guaranty expects that it will insure loans for portfolio lenders. Because of the recent sharp rise in interest rates, adjustable-rate mortgages, a specialty of porfolio lenders, have risen in popularity and many banks and thrifts have been competing vigorously for ARMs business.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.