Freddie Adds 5/1 Hybrid ARM

Freddie Mac has added a 5/1 hybrid ARM to its line of low-downpayment mortgage products called "Home Possible" that are designed for low- and moderate-income borrowers.The secondary-market company also announced that it has lowered the mortgage insurance coverage levels on Home Possible loans to make them more affordable. Freddie rolled out the Home Possible initiative in March with 7/1 and 10/1 hybrid adjustable-rate mortgages. Now it is adding the 5/1 ARM. "We are already changing it in response to customer feedback," Freddie Mac spokesman Brad German said. The mortgage giant also adjusted its policy on credit scores. Starting Sept. 18, Loan Prospector will process loan applications where only one of the borrowers in the transaction has a "usable" credit score. "This new feature in Loan Prospector will assist sellers in meeting the needs of borrowers who have little or no credit established," Freddie says in a July 26 industry letter.