WSJ: Freddie Mac Closed-End Second Proposal Puts Taxpayers at Risk

The Wall Street Journal writes on Freddie Mac’s recent proposal to purchase closed-end second mortgages noting the problems with allowing taxpayer-backed enterprises to enter this market. According to Bank of America research, if Fannie Mae were to follow suit, homeowners could extract up to $1.8 trillion in equity, nearly three times what is currently being offered by private markets. The Wall Street Journal highlights that this proposal is pro-cyclical in nature and, if home prices were to drop in a housing market downturn, taxpayers could be on the hook. 

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