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Freddie Mac no longer investing in certain subprime mortgages. (Business Alert).

FREDDIE MAC WILL NO LONGER INVEST IN subprime mortgages with prepayment penalty terms that exceed three years, effective for all subprime mortgages originated on or after Oct. 1, 2002. Freddie Mac is the first secondary mortgage investor to adopt such a stance on subprime prepayment penalty mortgages. The change also aligns Freddie Mac's subprime investment standards with the time it takes most borrowers to resolve credit issues.

Freddie Mac is timing its subprime investment changes to coincide with the Oct. 1 effective date of the lower interest rate triggers for disclosures on high-cost loans covered by the Home Ownership and Equity Protection Act (HOEPA) announced last year by the Federal Reserve Board. Freddie Mac has also created a consumer information guide on prepayment penalty mortgages that can be found at www.freddiemac.com/singlefamily/pdf/ppm.pdf.
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Title Annotation:Federal Home Loan Mortgage Corp.
Publication:Mortgage Banking
Article Type:Brief Article
Geographic Code:1USA
Date:Apr 1, 2002
Words:137
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