FHFA Approves Freddie Mac Second Mortgage Pilot Program
Are you a homeowner looking for ways to access equity in your home without refinancing at high interest rates? Well, you’re in luck! Freddie Mac has recently been granted conditional approval to pilot a program that allows for the purchase of closed-end second mortgages, providing an alternative to cash-out refinances.
FHFA Director Sandra L. Thompson expressed the importance of this limited pilot program in exploring how it can benefit borrowers, especially those in rural and underserved communities. With a maximum loan amount of $78,277 and a minimum seasoning period of 24 months for the first mortgage, this program aims to provide relief to homeowners facing unaffordable refinance options due to rising interest rates.
Industry experts like Scott Olson from the Community Home Lenders of America and Bob Broeksmit from the Mortgage Bankers Association have shown support for this initiative, emphasizing the need for innovative solutions in the current market environment. The FHFA will closely monitor the results of the pilot to ensure it aligns with Freddie Mac’s statutory purposes and benefits a wide range of borrowers.
Despite some opposition from trade groups, Freddie Mac’s head of single-family acquisitions, Sonu Mittal, defended the program as a responsible way for homeowners to access their equity without compromising on their existing mortgage rates. The FHFA has set a volume cap of $2.5 billion for the pilot program to address concerns about potential market impacts and ensure a controlled rollout.
Overall, this pilot program represents a step towards providing homeowners with more options for accessing equity in their homes. As the mortgage industry continues to navigate challenges like higher interest rates and limited inventory, initiatives like this one from Freddie Mac offer a glimmer of hope for borrowers looking to make the most of their home equity. Stay tuned for updates on the program’s progress and potential expansion in the future.
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