Freddie Keeps B&C Pledge, with Tighter Standards.(Federal Home Loan Mortgage Corp.)

WASHINGTON -- Freddie Mac has issued and purchased its first subprime mortgage securitization as part of a $20 billion commitment to Congress to provide liquidity to the subprime market and safer underwriting standards.

The $105.6 million securitization has subprime and alt-A loans originated by Wells Fargo Home Mortgage, Des Moines.

The four pools in the structured pass-through security contain fixed-rate and adjustable-rate mortgages, including 2/28 ARMs with prepayment penalties. The maximum margin on the ARMs is 450 basis points.

Back in February, the government-sponsored enterprise said it would stop buying subprime ARMs that featured excessive payment shock and introduce safer subprime products in September.

These subprime mortgages would be underwritten at the fully indexed rate and feature reduced adjustable-rate margins.

Freddie accelerated its schedule to midsummer as Senate Banking Committee leaders turned to mortgage lenders and the GSEs to take constructive actions to stem problems in the subprime markets and rising foreclosures.

In response, Freddie chairman and chief executive Richard Syron pledged to purchase $20 billion in subprime loans to refinance troubled subprime borrowers.