Freddie Mac's Biden-approved plan allowing second-lien mortgages 'is going to exacerbate that problem' around housing affordability, says former Ginnie May exec Michael Bright.
The Biden administration has approved a move that could essentially put taxpayers on the hook for risky borrowing practices and potential real estate losses – and a former mortgage insider is sounding off on the plan. "The people who should be really mad, I think, are first-time homebuyers who are trying to get their foot in the housing market.
The proposal allows homeowners to access their home equity while keeping their low interest rate on their current loan. The Urban Institute has reported that it could be a cost-effective alternative to cash-out refinances at today's higher rates, which sat at 6.87% for 30-year fixed rates and 6% for 15-year fixed rates as of Tuesday. But Bright warned that there are consequences of the government stepping in and guaranteeing second mortgages.
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