May 24, 2024

Scott, Colleagues Oppose Freddie Mac’s Proposed Second Mortgage Product

The proposal would drive inflation and increase taxpayer risk.

Washington, D.C. – Ranking Member Tim Scott (R-S.C.) today joined Senator Bill Hagerty (R-Tenn.) and his colleagues in sending a letter to Federal Housing Finance Agency (FHFA) Director Sandra Thompson opposing Freddie Mac’s misguided proposal to purchase and guarantee single-family closed-end second mortgages. Every Republican on the Senate Banking Committee, along with 23 members of the House Financial Services Committee, signed the letter to Director Thompson.

“This proposed product, if implemented, will exacerbate inflation, disrupt the home equity lending and consumer credit markets, and increase risks to taxpayers, while providing no benefit to the many Americans who lack substantial home equity,” Ranking Member Scott and his colleagues wrote. “We therefore urge the Federal Housing Finance Agency (FHFA) to reject this misguided and hastily executed proposal.”

“We are deeply concerned that the proposal is a thinly veiled attempt by the Biden administration to offset the effects of excessive fiscal spending and tight monetary policy as the November election approaches,” the members of Congress continued. “The sole purpose of the FHFA’s conservatorship of the GSEs is to restore their soundness and solvency so they can fulfill their statutory missions—under no circumstances should the FHFA’s ultimate authority as a conservator be exploited for political purposes. The GSEs are already the largest mortgage guarantors in the country; expanding their roles as consumer loan guarantors is a significant step in the wrong direction.”

To read the full letter, click here.