The Federal Housing Finance Agency (FHFA) announced in April a new product proposal for government-sponsored enterprise Freddie Mac that would allow the agency to purchase certain single-family, closed-end second mortgages. The plan would offer borrowers an alternative way to access their home equity without surrendering a first mortgage with a more favorable interest rate than is currently available. “[A] traditional cash-out refinance today may pose a significant financial burden, as it requires a refinancing of the entire outstanding loan balance at a new, and likely much higher, interest rate,” FHFA said in its proposal. “Homeowners may also use second mortgages to access the equity in their homes, [where] only the smaller, second mortgage would be subject to the current market rate, as the original terms of the first mortgage would remain intact.” The 30-day public comment period for the proposal ended May 16. Read more in HousingWire.
Source: HousingWire; 4/17/2024