Fannie Mae's efforts to rev up the housing market

The Federal National Mortgage Association (FNMA) is making up to $1.6 billion available over the next 11 months for home loans with new affordability and consumer protection features.

At an average of $60,000 per mortgage, FNMA - also known as Fannie Mae - says the commitment is enough to finance the purchase of 27,000 houses.

The special loans, which will be made through 199 lenders nationally, include deeper buy-down options than have generally been available. They also include interest-rate caps on adjustable mortgages, an option to convert adjustable loans into fixed-rate mortgages, early-ownership alternatives, and loans with no down payments.

All of the features will serve to make housing more affordable. The buy-down option, for example, where the seller ''takes back'' some of the initial cost, would knock 5 percent off the initial interest rate charged the borrower and drastically reduce the income necessary to qualify for the loan.

This loan is designed for buyers who have incomes large enough to qualify for a mortgage but lack the cash for a down payment. While the payments would be somewhat higher than standard loans because more is being financed, no down payment is required.

While the interest rate ultimately charged borrowers will be determined by market conditions, the new mortgage alternatives will be priced somewhat higher than standard adjustable loans because they provide more protection against rising interest rates, according to Robert J. Mylod, president of FNMA.

But, he adds, they should carry interest rates below those charged for fixed-rate mortgages, which give the borrower the security of knowing what his interest rate and monthly payment, excluding taxes, will be over the life of the loan.

The fee to convert a loan from an adjustable rate to a fixed rate will be limited to no more than 1.5 percent of the unpaid balance.