Freddie Mac Tightens Mortgage Purchases

Mortgage giant Freddie Mac said Tuesday it will no longer buy those high-risk home mortgages that 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, which is 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," McLean, Va.-based 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 CEO, said in a statement.