‘Oracle of Wall Street’ suggests that the US could provide homeowners with a $980 billion stimulus without any extra cost

Freddie Mac’s Proposal Could Unlock Nearly $1 Trillion for Homeowners

An exciting proposal is brewing at Freddie Mac, one of America’s government-sponsored mortgage finance giants, that could potentially unlock nearly $1 trillion for homeowners. According to a report by Meredith Whitney for The Financial Times, this move could provide a significant lifeline for homeowners in need of tapping into their home equity.

The idea behind the proposal is for Freddie Mac to start purchasing secondary mortgages, which would offer a cost-effective way for borrowers to access their equity. Currently, homeowners have limited options to do this, as there are not many willing buyers in the market.

If approved by regulators, this scheme could inject almost $1 trillion into consumers’ wallets as early as this summer, with the potential to reach $2 trillion by autumn. This would essentially act as a massive stimulus injection without adding to the national deficit.

By purchasing second mortgages and packaging them into bonds, Freddie Mac could encourage more banks to extend financing to customers, thereby unlocking a significant amount of home equity financing for Americans. This would be particularly beneficial for older Americans who are at risk of financial shocks and are taking on more debt than other age groups.

Overall, this proposal could provide a much-needed boost to the economy and consumers, especially as the economy appears to be slowing down. With more affordable avenues for homeowners to tap into their equity, this initiative could have far-reaching positive effects on the housing market and the overall economy.