WASHINGTON—The Federal Housing Finance Agency (FHFA) has announced its conditional approval for Freddie Mac to engage in a limited pilot to purchase certain single-family closed-end second mortgages.
The conditions of that approval include:
- A maximum volume of $2.5 billion in purchases
- A maximum duration of 18 months
- A maximum loan amount of $78,277, corresponding to certain subordinate-lien loan thresholds in the CFPB’s definition of Qualified Mortgage
- A minimum seasoning period of 24 months for the first mortgage
- Eligibility only for principal/primary residences
The Next Steps
The FHFA said it plans to analyze the data on Freddie Mac’s purchases of second mortgages upon the program’s conclusion to determine whether or not the objectives were met.
Any increase to the volume or extension of the duration of the pilot, or a conversion of the pilot to a programmatic activity, would be treated as a new product that is subject to public notice and comment and FHFA approval.