On
Wednesday,
the
FHFA
closed
the
comment
period
for
the

proposal,
which
was
opened
in
April.
In
their
letter,
Republicans
called
the
30-day
period
“insufficient.” 

If
the
product
is
approved
as
proposed,
it
will
have
terms
of
up
to
20
years,
be
manually
underwritten
and
remain
in
Freddie
Mac’s
portfolio
for
six
to
nine
months
until
second
mortgage
non-TBA-guaranteed
securities
are
created. 

Republicans
on
the
Senate
Banking
Committee,
along
with
23
members
of
the
House
Financial
Services
Committee,
signed
the
letter
sent
to

FHFA
Director
Sandra
Thompson
that
indicated
“political
purposes”
for
creating
the
new
product. 

“We
are
deeply
concerned
that
the
proposal
is
a
thinly
veiled
attempt
by
the
Biden
administration
to
offset
the
effects
of
excessive
fiscal
spending
and
tight
monetary
policy
as
the
November
election
approaches,”
the
letter
states. 

“The
sole
purpose
of
the
FHFA’s

conservatorship
of
the
GSEs
is
to
restore
their
soundness
and
solvency
so
they
can
fulfill
their
statutory
missions
—
under
no
circumstances
should
the
FHFA’s
ultimate
authority
as
a
conservator
be
exploited
for
political
purposes.
The
GSEs
are
already
the
largest
mortgage
guarantors
in
the
country;
expanding
their
roles
as
consumer
loan
guarantors
is
a
significant
step
in
the
wrong
direction.”

An
FHFA
spokesperson
told

HousingWire
that
the
letter
had
been
received
and
the
agency
“will
respond
appropriately.”

According
to
the
letter,
second
mortgages
are
consumer
loans
that
finance
spending
and
consumption,
counteracting
the
effects
of
tighter
monetary
policy
and
worsening
inflation
for
Americans. 

Strategists
at

Bank
of
America
estimate
the
product
could
unlock

$850
billion
in
origination
volume. 

Freddie
Mac’s
head
of
single-family
acquisitions,

Sonu
Mittal,
told

HousingWire
this
week
that
the
product
“will
provide
borrowers
an
alternative
to
the
cash-out
refi.”

“The
thing
I
keep
trying
to
tell
folks
is
that

this
is
not
HELOC;
this
is
not
piggyback
where
you
can
do
first
and
second,
and
this
is
not
open
to
all
first-lien
mortgages
in
the
country.
It’s
only
if
you
have
a
Freddie
Mac
first
mortgage.
So,
when
you
start
slicing
it
with
all
those
different
cuts,
it’s
a
different
sizing
or
opportunity
that
exists.”  

Members
of
Congress
are
also
concerned
that
the
proposed
Freddie
Mac
product
will
crowd
out
private
capital
while
expanding
the
GSE
into
other
credit
markets.
Groups
such
as
the


Mortgage
Bankers
Association
(MBA),
the

U.S.
Mortgage
Insurers
(USMI)
and
the


Housing
Policy
Council
(HPC)
highlighted
the
same
concerns
in
comments
to
the
FHFA.

“The
proposed
product
will
primarily
help
homeowners
who
possess
meaningful
equity
in
their
homes
and
have
already
gained
from
the
68.9%
increase
in
home
prices
since
the
pandemic,”
the
letter
states. 

“It
offers
no
benefit
to
renters
or
homeowners
who
lack
meaningful
equity,
such
as
first-time
homebuyers.
In
fact,
the
proposal
is
likely
to
adversely
affect
these
Americans
through
its
broader
inflationary
impact
on
the
economy,
as
well
as
by
exacerbating
the
rate
lock-in
effect,
the
adverse
effects
of
which
were
reported
on
by
the
FHFA
earlier
this
year.”