CHICAGO -- May 9, 2006 -- Freddie Mac announced yesterday that it would roll out new types of mortgages available through its Web-based Selling System aimed at making the payments more affordable for consumers. The mortgage giant will add a new array of 40-year fixed-rate mortgages, 20 more adjustable-rate mortgage products and federally insured rural housing mortgage products to its Loan Prospector automated underwriting service and its online Selling System.

Freddie Mac officials also announced they are beefing up the company's flagship suite of Home Possible affordable mortgage products by adding a special 40-year fixed-rate option and providing lenders with more competitive selling options.

Separately, the company said it is revising its property insurance requirements to facilitate mortgage purchases in coastal markets where insurers are raising their deductibles.

The new mortgage products will become available this summer.

40-year home possible mortgage: More house with less income

Freddie Mac is in the process of rolling out a comprehensive line-up of 40-year mortgage options beginning with a standard 40-year fixed-rate mortgage product, a 40-year version of the Freddie 100 no-downpayment mortgage product and a 40-year Alt 97 mortgage.

The first set of planned enhancements include a 40-year fixed-rate version of the Home Possible mortgage that builds on Home Possible's standard low downpayments, flexible credit underwriting, and conforming conventional rates to give cash and credit strapped borrowers more buying power.

For example, by opting for a $200,000 40-year, no-downpayment Home Possible mortgage at today's rates a borrower would need 3.5 percent less gross monthly income to qualify. They would get a 4.5 percent cut in their monthly housing payment and 5 percent more home buying power compared to a 30-year version of the same mortgage.

Other Home Possible changes announced at the MBA Secondary will cut the minimum borrower contribution for financing 3-4 unit properties from 5 percent to 3 percent and enable borrowers to use Mortgage Credit Certificates and Rural Housing Service Leveraged Seconds.

Helping borrowers cope with rising insurance deductibles

Freddie Mac officials told the MBA conference the company is in the process of aligning its underwriting policies to accommodate recent property insurance deductible increases triggered by the last two years of severe hurricanes in Florida and along the Gulf Coast.

Scheduled to take effect in July, the modification will increase the maximum deductible in Freddie Mac's guidelines from 2 percent to 5 percent for fire, water (not caused by flooding) or wind damage coverage for 1- to 4-unit properties, condominiums and Planned Unit Developments (PUDs).

The change will give more borrowers access to lower mortgage rates through Freddie Mac loans and help support the housing recovery efforts along the Gulf Coast. The higher deductibles are also expected to help borrowers lower their annual insurance premiums. Freddie Mac estimates the lower premiums could generate enough savings to offset the higher 5 percent deductible within two to four years.

© 2006 FLORIDA ASSOCIATION OF REALTORS®