Pilot Transparency
As Freddie Mac finds new ways to serve its broad mission, the company plans to take a number of new actions to increase liquidity, stability and affordability and create sustainable housing opportunities.
One way we test these actions is through a pilot, or “test-and-learn.” These efforts help us measure the effectiveness of an activity, make improvements, and mitigate risks. We work with the Federal Housing Finance Agency to ensure all pilots are consistent with our charter and follow established governance processes.
The information below is designed to increase transparency around Freddie Mac’s active pilots and test-and-learns, in addition to those that were recently designated inactive.
Closed-End Second Mortgages
In a housing market marked by high mortgage rates and low housing supply, second mortgages can offer substantial benefits for borrowers, lenders and the overall market — often at a lower risk than some alternatives such as a cash-out refinance. Freddie Mac is engaging in a limited pilot to purchase certain single-family closed-end second mortgages as part of a conditional approval by FHFA, which includes the following terms:
- A maximum purchase volume of $2.5 billion.
- A maximum duration of 18 months.
- A maximum loan amount of $78,277, corresponding to certain subordinate-lien loan thresholds in the Consumer Financial Protection Bureau’s definition of Qualified Mortgage.
- A minimum seasoning period of 24 months for the first mortgage.
- Eligibility for principal/primary residences only.
Upon the pilot’s conclusion, FHFA will analyze the data on Freddie Mac’s purchases of second mortgages to determine whether the objectives of the pilot were met and next steps.
Pilot Scope: Limited rollout started in December 2024.
Plan Alignment: N/A
Pilot Status: Active
Fee-Based Repurchase Alternative for Performing Loans
To work with Sellers on improving the quality of performing loans, the company will pilot a replacement to its current repurchase policy for defective performing loans. The pilot will use a fee-based structure that is more efficient, transparent and rewards lenders that deliver high-quality loans. Specifically, lenders will not be subject to repurchases on most performing loans and will instead be subject to a fee-based structure based on non-acceptable quality (NAQ) rates. The fee will apply uniformly to medium and large lenders based on NAQ rates and will be waived for smaller lenders that do not deliver a large enough volume to generate a statistically significant NAQ rate. Loans that are non-performing within 36 months or subject to life of loan defects will still be subject to repurchase. This fee structure will begin with a limited rollout with targeted lenders in early 2024.
Pilot Scope: Limited rollout starting in early 2024.
Plan Alignment: N/A
Pilot Status: Active
Appraisal Modernization
Our efforts focus on assessing enhancements for new and existing collateral valuation methods. The overarching objectives are to promote more consistent outcomes and maintain appropriate levels of risk management to mitigate the loss associated with default, while creating efficiencies that may save time and lower costs in the appraisal process.
Pilot Scope: Limited to target set of lenders, ensuring participation of small and medium size lenders. Pilot is ongoing in 2025.
Plan Alignment: N/A
Pilot Status: Active
Shared Equity Conversion
The COVID-19 pandemic caused hardships for millions of homeowners, many of who took advantage of forbearance. However, due to long-term or permanent changes in household composition and earnings, we expect some homeowners may require payment relief beyond existing offerings to stay in their homes when their forbearance expires. The Shared Equity Conversion pilot provides eligible distressed borrowers the option to opt-in to shared equity homeownership, in coordination with a loan modification, to receive deeper payment relief and keep their homes.
Pilot Scope: The pilot was capped at a fixed number of loans modified. The pilot began in 2022 and has concluded.
Plan Alignment: N/A
Pilot Status: Inactive
Asset and Income Modeler (AIM) for Direct Deposit
AIM for Direct Deposit confirms that a borrower has sufficient income capacity to meet payment obligations, leveraging direct deposits identified from 12-24 months from financial institution account data. This improves risk management. It also reduces the paper documentation burden on borrowers, speeding up loan closings and simplifying the lending process.
Pilot Scope: The pilot was capped at a fixed number of loans delivered to Freddie Mac. Pilot ended on March 2, 2022 when it was launched broadly.
Plan Alignment: N/A
Pilot Status: Inactive