From the comment's introduction:
Many mortgage lenders are willing to offer cash-out refinances because the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac, the Federal Housing Administration (FHA), or the Department of Veterans Affairs (VA) bear the credit risk. However, fewer lenders are willing to make home equity loans, especially to borrowers with lower credit scores, given the associated credit risk and the lack of a developed secondary market. As a result, despite the benefits of home equity loans over cash-out refinances described below, many borrowers continue to access their home equity using cash-out refinances or are unable to access it all, particularly, low-wealth, lower credit score, minority, and Veteran borrowers served by FHA and VA. In order to address the needs of these borrowers, Freddie Mac would have to relax the requirement that they own the first mortgage before purchasing the second. However, even as written, the proposal is a commendable first step toward increasing the availability of second mortgages.