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ICBA announced its opposition to 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.
Details: In a national news release, ICBA said it is 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.
ICBA Concerns: In the release, ICBA President and CEO Rebeca Romero Rainey cited ICBA’s recent comment letter on the pilot that said:
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.
ICBA View: ICBA has repeatedly called on the FHFA and Treasury Department to end the 15-year conservatorship of Fannie Mae and Freddie Mac and return the enterprises to private ownership and control, as required by the Housing and Economic Recovery Act of 2007. In a recent Main Street Matters post, ICBA’s Ron Haynie said policymakers should end the conservatorship to ensure Fannie and Freddie focus on expanding the secondary mortgage market instead of serving as cash machines for the federal government.