Freddie B&C Program to Support Prepay Penalties

A new Freddie Mac subprime purchase program in development for release this summer is expected to support prepayment penalties, but in a more consumer-friendly manner than in the past, according to a presentation at the National Association of Mortgage Brokers annual convention in Seattle.The program, which Freddie has been testing with five or six lenders, will be in line with the government-sponsored enterprise's new restrictions on certain nontraditional mortgage purchases set to take effect Sept. 1, said Charles Coulter, vice president of sourcing strategies and solutions at Freddie Mac. When asked for further details, he said he could not be much more specific about the program because it is "still in development." However, when asked about prepayment penalties, he said the planned move down the credit curve is expected to support them, but would never allow them to go beyond the fixed period of the loans carrying them. Freddie Mac can be found online at http://www.freddiemac.com.