On June 20, FHFA
conditionally approved a limited pilot program for Freddie Mac to begin purchasing certain single-family closed-end second mortgages. This decision came after implementing a new approval process for products from Freddie Mac and Fannie Mae, which became effective in April 2023. The pilot will determine if the new mortgage product “advances Freddie Mac's statutory purposes and benefits borrowers, particularly in rural and underserved communities.”
FHFA's approval will set specific limitations for the pilot, including (i) a $2.5 billion cap on purchases; (ii) a maximum duration of 18 months; (iii) a maximum loan amount of $78,277, (in alignment with the CFPB’s Qualified Mortgage criteria); (iv) a 24-month “seasoning period” for the first mortgage; and (v) a restriction to primary residences only. Following the pilot, the FHFA will evaluate its success and effectiveness. Any proposed expansion or conversion of the pilot into a regular program will require a new round of public comments and FHFA approval, based on the pilot's initial outcomes.
