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Washington, D.C. (June 24, 2024) — Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued the following statement on the Federal Housing Finance Agency’s conditional approval of Freddie Mac’s proposal to engage in a pilot program to purchase certain single-family closed-end second mortgages.
“ICBA and the nation’s community banks are deeply concerned with the FHFA’s announcement that Freddie Mac — which has been in federal conservatorship for more than 15 years — will enter a market that is already liquid and well served by private-sector community banks.
“As ICBA said in a comment letter to the FHFA on this proposal last month:
Freddie Mac has failed to establish or justify a market need for this product, with single-family closed-end second mortgages readily available in the private sector.
The proposal could exacerbate housing supply challenges for new homebuyers during an already-challenging interest rate environment.
Freddie Mac has not provided sufficient details regarding pricing, property valuation, and risk management for its proposal, which is not consistent with its core housing mission.
This product will only further delay Freddie Mac’s exit from conservatorship by diverting resources and requiring additional credit risk mitigation that would keep it from retaining appropriate levels of capital.
“Amid a 15-year conservatorship that has subjected Fannie Mae and Freddie Mac to political influence and compromised their founding purpose of expanding the secondary mortgage market to provide liquidity for home purchases and refinances, the FHFA should avoid further disrupting the private sector, reject a perpetual conservatorship, and return the enterprises to private ownership and control, as required by the Housing and Economic Recovery Act of 2007.”
About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.
As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.