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SFA Urges Federal Housing Finance Agency to Reject Freddie Mac’s Plan to Buy Second Mortgages

Published on May 23, 2024

WASHINGTON, May 23, 2024 – The Structured Finance Association (SFA), a leading trade association representing the structured finance and securitization industry, sent a comment letter to the Federal Housing Finance Agency (FHFA) opposing a proposal by the Federal Home Loan Mortgage Corporation (Freddie Mac) to begin purchasing second mortgages.

SFA members view Freddie Mac’s plan as unnecessary government encroachment into a market that has been operating effectively without government involvement. Members also believe the proposal – which involves single-family, closed-end second mortgages – falls outside the mission of government sponsored enterprises (GSEs) like Freddie Mac. SFA’s comment letter explains that the proposal will not make homes more affordable as Freddie Mac asserts and will vastly and unwisely expand the GSEs’ footprint in the U.S. housing finance system, which they already dominate. U.S. taxpayers, who backstop Freddie Mac activities, do not need the added exposure to new risks.

SFA members understand that Freddie Mac’s proposal would provide some benefits, but think the hazards far outweigh them.

“The Structured Finance Association speaks for every type of participant in the securitization market – from buyers to sellers. We strongly recommend that the FHFA reject Freddie Mac’s proposed new product for the benefit of consumers and the marketplace,” said Michael Bright, CEO of the Structured Finance Association. “We ask the FHFA to seriously consider our recommendation and we look forward to continuing to engage with policymakers on this important issue. The proposed product simply isn’t one that the government should or needs to be involved in.”

About the Structured Finance Association:

With more than 370 member institutions comprised of accounting firms, broker/dealers, diversified financial intermediaries, investors, issuers, IT vendors, law firms, mortgage insurers, other small financial institutions, rating agencies, servicers, and trustees, SFA is the leading voice for the securitization industry.

SFA is focused on helping grow the real economy and improving the lives of individuals, families, businesses, and communities across the nation; helping make credit more affordable and available to people who need it to finance some of life’s biggest goals — education, car purchases, starting a business, buying a home — or reduce their debt through consolidation loans; safeguarding essential protections for consumers and the financial system; facilitating valuable dialogue among the financial services market, its practitioners, policymakers and the broader public; and recognizing that all finance entails risk, but it should not involve recklessness.

For inquiries, please contact Walt Cronkite, Director of Communications at the Structured Finance Association.