Comment on Freddie Mac Proposed Purchase of Single-Family Closed-End Second Mortgages
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...