There is $17 trillion of home equity sitting with U.S. homes, and Freddie Mac wants to offer second mortgages to tap into it. Here’s what you should know:

by TonyLiberty

There is $17 trillion of home equity sitting with U.S. homes, and Freddie Mac wants to offer second mortgages to tap into it.

Tapping into home equity was a massive part of what fueled the banking crisis in 2008.

Here’s what you should know:

Homeowners would be able to take out a second mortgage to access a portion of their home equity without having to refinance their first mortgage.

The second mortgage would function similarly to a fixed-rate cash-out refinance and be a separate loan from the primary mortgage.

This would be a more attractive option in today’s high-interest-rate environment, as homeowners can access cash without increasing their mortgage’s interest rate.

The FHFA is currently reviewing this proposal.

Freddie Mac’s Second Mortgage Proposal Is Consumer Friendly | Urban Institute