The thing is that that's a personal loan, not a second-lien mortgage.
A personal loan at a 9.5% rate, using the collateral (property) already owned by Freddie Mac.
Unrelated to a mortgage.
This is why it's been announced just after the CEO of Freddie Mac with 30+ years of experience in mortgage finance, resigned "in the 1Q2024". He finally left the company on March 15th.
I guess that Freddie Mac would have to apply for a banking licence.
High interest rates as a consequence of the price of the collateral ballooned (overheated), means that your are doubling down on credit risk, and at the time when FnF aren't allowed to take possession of that collateral that covers the credit risk, because they are compelled to sell their NPL and RPL to Goldman Sachs & Co and the hedge funds, even at a discount. Judicial states delay it, etc.
The same loan amount can be achieved with cash-out refinancings, when the entire UPB of the mortgage and more, is refinanced at low rates.
FnF purchase the first-lien mortgage and the banks keep the second-lien mortgage on their balance sheets.
You can read more about it in the FHFA website, in light of the request for comment on this new product.
I'm in favor of FnF purchasing the second-lien mortgages, but in cash-out refinancings (less risky: low rates and low home prices), not in personal loans that is what has been proposed.
There are second-lien mortgages worth $ billions in the banks' balance sheets, where FnF own the collateral, but the banks are allowed to do business with it (collateral-sharing)
This why the reason of the famous robosigning case with foreclosures in early conservatorship. The banks (servicers of the mortgages) wanted to foreclosure on the properties fast, in order to protect their second-lien mortgages. You would wonder why a 2nd-lien gets paid first.
The repurchase of all the second-lien mortgages in cash-out refinancings already outstanding, would boost the economy and the banks' battered balance sheets.
