Presidential Election Could Determine Fate of Freddie CES

Home Equity Lending News cited CEI on FHFA’s home-equity program

“Government agencies are always looking for a way to expand their role,” says John Berlau, a senior policy fellow and director of finance policy for the Competitive Enterprise Institute, a libertarian Washington, D.C. think tank. “The interesting thing about this program is that it doesn’t fit either a conservative or liberal agenda.”

Conservatives oppose the expansion of government, particularly in a way that “picks winners and losers,” he said.

“There are no guarantees, though, that a Trump administration would cancel the program because there’s division within the Republican party between free market conservatives and populists,” Berlau said. “On the other hand, this program doesn’t do much for the less affluent, so there’s no guarantee that it would be continued under a Harris administration either. It furthers inequality and doesn’t achieve equity. It’s not a great program for someone strapped for funds.”

In Berlau’s view, Freddie’s CES entrance doesn’t promote equity among homeowners because of the limitation that the borrower’s first mortgage must be with Freddie. Low or moderate income borrowers are more likely to have mortgages insured by the Federal Housing Administration than a conventional loan, and lower-income borrowers in rural areas are more likely to have a USDA first mortgage. In addition, renters do not have access to financial support through a second home loan.

Read more at Home Equity Lending News