WASHINGTON - Mortgage giant Freddie Mac said Tuesday it will no longer buy high-risk home mortgages it deems to be the most vulnerable to foreclosure. The surprise move came amid a deteriorating market for subprime loans affected by slumping home prices and rising interest rates.
The government-sponsored company, the second-biggest financer of home loans in the United States, said it will begin using stricter standards for mortgages that it buys - including limiting the use of loans requiring less documentation of the borrower's status than conventional mortgages. The goal is "to help ensure that future borrowers have the income necessary to afford their homes," Freddie Mac said.
"The steps we are taking today will provide more protection to consumers and enhance the level of underwriting standards in the market," Richard Syron, the company's chairman and chief executive, said in a statement.
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