Freddie Mac to Buy Conforming Jumbo Mortgages in High Cost Markets From Wells Fargo,...

Freddie Mac to Buy Conforming Jumbo Mortgages in High Cost Markets From Wells
Fargo, Chase, CitiMortgage, WaMu
Temporary Stimulus Act Authority May Add $10-$15 Billion in Mortgage Sales
This Year

MCLEAN, Va., April 17 /PRNewswire-FirstCall/ -- Freddie Mac (NYSE: FRE)
has agreed to purchase billions of dollars of new conforming jumbo mortgages
with original loan amounts up to $729,750 from Wells Fargo Home Mortgage,
Chase, CitiMortgage and WaMu. Freddie Mac conforming jumbo mortgages can be
used to finance properties in hundreds of high cost markets designated in the
Economic Stimulus Act of 2008 President Bush signed on February 13.
Today's announcement marks the first large-scale effort to jump-start the
stalled jumbo mortgage market under the Economic Stimulus Act, which
temporarily raised Freddie Mac's conforming loan limit from $417,000 to as
much as $729,750 through December 31, 2008. Freddie Mac's purchase of
conforming jumbo mortgages is restricted to 224 high cost markets where median
home prices exceed Freddie Mac's $417,000 loan limit.
As a result, qualified borrowers can now apply for an array of fixed-rate
or adjustable rate conforming jumbo mortgages that will be less expensive than
non-conforming jumbo loans in high cost markets. Borrowers can use Freddie
Mac conforming jumbo mortgages to finance up to 90% of a property's value.
Because Freddie Mac is buying the new conforming jumbo mortgages for its
portfolio, Wells Fargo, Chase, CitiMortgage and WaMu will have instant
liquidity and can offer a stable jumbo market rate to qualified borrowers. By
working with Wells Fargo, Chase, CitiMortgage, WaMu and other national
lenders, Freddie Mac expects to finance between $10 and $15 billion in new
jumbo mortgages in 2008.
"Purchasing conforming jumbo mortgages for our portfolio shows how we can
bring new liquidity to markets other investors have all but abandoned and make
full use of the new tools Congress gave us to help restore stability during
the current housing crisis," said Freddie Mac Chairman and CEO Richard Syron.
"We initially expect conforming jumbo mortgages to have rates that are as much
as half a percentage point below the jumbo market rate in many of these high
cost markets."
"I want to thank Wells Fargo, Chase, CitiMortgage and WaMu for working
with us and enabling us, in a new way, to fulfill our public mission to
America's lenders and borrowers," Syron added.
"CitiMortgage applauds Freddie Mac for agreeing to buy loans for these
qualifying borrowers, and we are looking forward to working with Freddie and
borrowers to improve housing affordability in these higher cost markets," said
Bill Beckmann, CitiMortgage president.
"These new conforming jumbo mortgages will reduce homeownership costs for
families in high-cost areas," said Dave Lowman, CEO of Chase Home Lending.
"Freddie Mac's involvement will help increase availability."
"We value our relationship with Freddie Mac which enables us to
collectively do great things for consumers," said Mike Heid, co-president of
Wells Fargo Home Mortgage. "While Wells Fargo has offered jumbo loans directly
to consumers throughout the current market correction, this important
agreement provides a reliable investor for loans in high-cost areas which, in
turn, further broadens our ability to serve these customers."
While specific product availability may vary by lender, Freddie Mac has
said it will buy 15-, 20-, 30- and 40-year fixed-rate, fully amortizing
conforming jumbo mortgages; 30-year fixed-rate mortgages with 10-year
interest-only periods; fully amortizing 5/1 adjustable-rate mortgages (ARMs)
and 5/1 ARMs with 10-year interest-only periods. Qualified borrowers can also
obtain cash-out refinance conforming jumbo mortgages that provide a maximum
cash-out of $100,000.
For more information on Freddie Mac conforming jumbo mortgage products,
visit http://freddiemac.com/singlefamily/increased_limits.html.
Freddie Mac is a stockholder-owned corporation established by Congress in
1970 to support homeownership and rental housing. Freddie Mac purchases
single-family and multifamily residential mortgages and mortgage-related
securities, which it finances primarily by issuing mortgage-related securities
and debt instruments in the capital markets. Over the years, Freddie Mac has
made home possible more than 50 million times, ensuring financing for one in
six homebuyers and more than four million renters. For additional information
about Freddie Mac, visit: http://www.FreddieMac.com.
SOURCE Freddie Mac

Brad German of Freddie Mac, +1-703-903-2437