BANKING/FINANCE

To provide more financing for home buyers, Western Financial Savings Bank in Orange has negotiated an agreement to exchange $50 million of adjustable-rate mortgages for a like amount of securities from a major secondary market purchaser.

The deal marks the first time that the Federal Home Loan Mortgage Corp., known as Freddie Mac, has agreed to an even swap of adjustable-rate mortgages that carry interest rate caps for securities it issues based on those mortgages.

The ability to swap the mortgages for securities, called participation certificates, “should help us to continue to expand our loan production during 1988,” said Stephen W. Prough, the S & L’s president.

The securities, which Western Financial could sell at any time to raise more cash, can also be used as collateral for the S & L’s own borrowing and financing needs.

Another major buyer in the secondary market, the Federal National Mortgage Assn., known as Fannie Mae, already engages in such swaps.