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.