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  • Comment Detail

  • Date: 05/05/24
    First Name: Emily
    Last Name: Anderson
    Organization: N/A
    City: N/A
    State: N/A
    Attachment: N/A
    Number: 2024-N-5

  • Comment

    My name is Emily Anderson, and I am a seasoned mortgage broker with over a decade of experience serving the community of Boise, Idaho. I am writing to express my reservations regarding Freddie Mac's proposal to introduce closed-end second lien mortgage loans into the market.

    As someone deeply entrenched in the mortgage industry, I cannot overlook the potential pitfalls associated with this new product:

    Market Volatility Vulnerabilities
    In an era marked by economic uncertainty, the introduction of closed-end second mortgages could exacerbate market volatility. These products, inherently riskier due to their junior lien status, have historically displayed heightened sensitivity to economic downturns. Such volatility could have adverse effects on borrowers' financial well-being and the broader housing market stability.

    Consumer Protection Imperatives
    The introduction of closed-end second mortgages necessitates stringent consumer protection measures. Given their propensity for risk, it is imperative that Freddie Mac implements robust underwriting standards and provides comprehensive borrower education to mitigate the risk of borrower default. Without adequate safeguards, vulnerable borrowers may fall victim to predatory lending practices, exacerbating financial distress.

    Impact on Housing Affordability
    The proliferation of closed-end second mortgages could have deleterious effects on housing affordability, particularly in underserved communities. By incentivizing equity extraction over long-term wealth accumulation, Freddie Mac's proposal may inadvertently contribute to widening wealth disparities and exacerbating housing inequality. As stewards of the housing finance system, it is incumbent upon FHFA to prioritize initiatives that foster sustainable homeownership and promote equitable access to housing.

    Market Distortion Risks
    The introduction of closed-end second mortgages may distort the competitive landscape of the mortgage market, diverting resources away from initiatives aimed at expanding affordable housing opportunities. Lenders may be incentivized to prioritize the promotion of closed-end second mortgages over other, more socially responsible lending products, thereby impeding efforts to address the affordable housing crisis.

    In conclusion, while I appreciate Freddie Mac's efforts to enhance market liquidity, the introduction of closed-end second mortgages raises significant concerns regarding market stability, consumer protection, housing affordability, and market distortion. I urge FHFA to exercise prudence in evaluating this proposal, prioritizing initiatives that uphold the principles of responsible lending and equitable access to housing.

    Thank you for considering my perspective.

    Sincerely,

    Emily Anderson