Freddie Mac Statement On Support For Alt-a Market
|August 20, 2007|
McLean, VA – Paul E. Mullings, senior vice president for single family sourcing at Freddie Mac (NYSE:FRE) today released the following statement regarding the Alternative-A market:
"Freddie Mac continues to be an active force in the Alt-A market and is taking steps to increase liquidity in the Alt-A market while maintaining its commitment to prudently and responsibly manage mortgage credit risk.
"Specifically, Freddie Mac is providing 90-day forward commitment capability on a negotiated basis to experienced lenders with credit terms that will accommodate a majority of the fixed and adjustable rate Alt-A product, including many of the reduced documentation mortgages underwritten with appropriate credit risk offsets that Freddie Mac now purchases on a bulk basis through structured transactions.
"Available credit terms specifically include reduced documentation mortgages under-written with appropriate credit risk offsets. This will give more Alt-A borrowers the security of being able to lock in their rate for up to three months.
"At the same time, we are committed to continuing our current bulk purchases of a wide range of Alt-A products on a spot bid basis.
"Going forward, based on our continual assessment of credit performance and market conditions we may determine to restrict credit terms available for certain higher risk mortgage products, including no-documentation and high LTV Alt-A mortgages.
"By taking these steps, Freddie Mac continues to fulfill its mission to provide stability, liquidity, and affordability to the US housing finance system and put more people in homes they can afford and keep."
Source: Freddie Mac