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Comment

My name is Debrah Kim, and I'm a housing counselor and community advocate in the Los Angeles area. On behalf of the households I work with every day who are struggling to find affordable housing opportunities, I must voice strong objection to Freddie Mac's plan to start purchasing closed-end second mortgages.

From where I sit, this proposal is completely backwards and disconnected from the realities facing working families and communities of color in my region. Home prices have spiraled out of control, leading to displacement and entrenched barriers to homeownership, especially for younger generations just starting out. The last thing we need is another product that will inflate housing costs even further by incentivizing households to drain more equity out of their properties.

If Freddie wants to truly advance its mission, it should be looking for responsible ways to put equity INTO communities through increased mortgage lending, homebuyer assistance, affordable housing development and the like. Giving affluent homeowners another avenue to cash out and reduce their housing tenures works directly against the interests of the underserved populations Freddie is supposed to support.

Not only is this a misguided and harmful idea from an affordability lens, but it also layers on excessive credit risk unnecessarily. These closed-end second liens are riskier and more complex products that put both the borrower and Freddie in a more precarious position, especially if we enter a weaker housing cycle. Why would we encourage that kind of lending over safer, more sustainable mortgage products?

As a housing counselor, I've seen firsthand the damage done when homeowners struggling with existing mortgage debt get lured into riskier products like these that put their long-term equity building at risk. This sets up the next crisis down the line. For a mission-driven entity like Freddie Mac to head in this direction seems incredibly short-sighted.

There are so many better ways Freddie could be deploying its resources - supporting minority homeownership and wealth-building, incentivizing affordable housing construction, providing fair and flexible lending in underserved areas, and making homeownership more accessible for first-time and younger buyers. Those should be the priorities, not giving affluent borrowers another avenue to drain their home's equity.

On behalf of the hardworking families I serve who are doing everything they can to achieve sustainable homeownership, I urge you to reject this misguided proposal. Freddie's mission is too important to be distracted by products that only make housing less affordable and increase systemic risks. I appreciate you taking the time to consider these perspectives from those of us on the frontlines of the affordable housing challenge.

Sincerely,
Debrah Kim