FREDDIE MAC GUIDE ENHANCEMENTS OFFER MORE ARM PRODUCTS AND NEW ADVANTAGES FOR ARM SALES

McLean, Va. – Freddie Mac announces today that it has added a full line of London Interbank Offered Rate (LIBOR)-indexed adjustable-rate mortgage (ARM) products to its Single-Family Seller/Servicer Guide. Lenders can now take advantage of more than 50 different Guide-eligible ARM product variations, with a newly reduced minimum servicing spread of 0.25% for all ARMs, and newly revised Uniform Instruments. Previously, LIBOR ARM products were only available for sale to the company on a negotiated basis.

The changes were made to give lenders additional flexibility in their efforts to expand home ownership opportunities while meeting more borrower needs.

The ARM products in Freddie Mac's Guide now include convertible and non-convertible LIBOR-indexed ARMs, and convertible and non-convertible 1-year Constant Maturity Treasury (CMT)-indexed ARMs, including 3/1, 5/1, 7/1 and 10/1 hybrid ARMs. Lenders can sell these ARMs to Freddie Mac in exchange for securities through the weighted average coupon (WAC) ARM Guarantor execution or for cash.

"We are focused on making it easier for lenders to do business with us," said Dave Stevens, senior vice president of Single Family Lending for Freddie Mac. "These enhancements are just the beginning of a year of solid innovation we intend to bring to the marketplace so lenders can power up their mortgage business."

Stevens added, "ARMs are another tool to help lenders reach more homebuyers and refinance borrowers who are looking for lower rates and payments. Plus, our entire ARM product line is available to lenders through our Loan Prospector automated underwriting service – providing fast loans assessments 24 hours a day."

According to Freddie Mac's annual ARM survey of lenders, released Feb. 17, hybrid ARMs now account for the bulk of ARM originations and nearly half of all lenders surveyed offered 1-year LIBOR-indexed loans. In addition, potential homebuyers and existing homeowners opting for a 30-year ARM with an original loan amount of about $150,000 can expect initial savings over a fixed-rate mortgage of up to nearly $2,145 for 1-year conforming ARMS; and more than $4,761 with a 7/1 hybrid ARM (wherein the first rate adjustment occurs in seven years and then adjusts on an annual basis).

Freddie Mac offers live web-based training on the ARM Guide changes for lenders.

In addition to the expanded availability of additional ARM products, the company also updated its guidelines for selling ARMs by completely reorganizing and enhancing requirements in the Guide, so lenders can easily locate and understand these requirements. By making the minimum servicing spread for all products consistent at 0.25%, lenders now have more flexibility when selling ARM and balloon/reset products. Currently, lenders can sell both LIBOR and Treasury-indexed ARM varieties through the WAC ARM Guarantor execution, swapping their ARMs for a Freddie Mac Participation Certificate (PC). Freddie Mac also offers multiple cash sale options.

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