Freddie Mac said today it plans to buy as many as $20 billion in subprime loans as part of a new initiative to help subprime borrowers refinance into more affordable mortgages.

Richard Syron, chief executive of the second-largest U.S. mortgage buyer, said the program, expected to begin in July, would last between two and five years. The GSE has yet to release specific details as to how its current loan purchase program would be modified to allow for the increased buying, although its new offerings are expected to include 40-year fixed-rate mortgages and ARMs with reduced margins and longer fixed-rate periods.

To address "more immediate needs," Freddie Mac said it may modify its exsiting HomePossible mortgage program, which caters to high LTV borrowers with blemished credit histories. The agency recently ruffled feathers among investors when it announced changes to its loan purchase criteria, particularly that it would no longer be purchasing subprime mortgages which had been approved based on a borrower's ability to pay only the initial monthly payment.

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