The nation’s mortgage insurance companies are warning about a new pilot program that enables Freddie Mac to bypass traditional mortgage insurance.

The McLean, Virginia-based secondary mortgage lender has launched a pilot program known as Integrated Mortgage Insurance, or IMAGIN.

A newly created U.S. subsidiary or Hamilton, Bermuda-based Arch Capital Group LTD — Arch MRT — has agreed to insure Freddie then transfer 100 percent of the risk to re-insurers.

Source: Mortgage Daily