Freddie Mac said it will raise prices further and add underwriting restrictions for the mortgages it guarantees, because of "continued deterioration of credit quality and declining home values in most areas of the country."

Starting June 1, the McLean, Va., government-sponsored enterprise will assess a 30-basis-point fee on loans where the debt backed by the home is 80% or more of its value, and the borrower has a credit score of less than 740.

A number of other price increases based on credit scores and loan-to-value ratios also will take effect at that time, Freddie said.

It also said it will stop buying mortgages with loan-to-value ratios higher than 97%, except for those backed by the Federal Housing Administration or the Department of Veteran Affairs, along with certain other exclusions.

(c) 2008 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

http://www.mmexecutive.com http://www.sourcemedia.com

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.