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May 23, 2024

FHFA Proposal for a New Home Equity Loan Product Would Result in More Debt, Endangering Consumers, Homeowners, and Financial Stability

WASHINGTON, D.C.— Shayna Olesiuk, Director of Banking Policy, issued the following statement in connection with the filing of Better Markets’ Comment Letter on the Federal Housing Finance Agency (FHFA) proposal to allow the Federal Home Loan Mortgage Corporation (Freddie Mac) to provide mortgage borrowers with a new loan product to access equity in their homes.

“Home price increases in recent years have contributed to Americans having a near record amount of home equity. This creates an increasingly strong temptation for families to access their nest egg with a home equity loan. While some homeowners may responsibly use funds from a home equity loan to build wealth, many will not; the risks and costs of the proposal are substantial and threaten financial stability. Data show that large shares of home equity loan proceeds are used for debt consolidation or additional consumption. This simply adds to families’ debt burden, without increasing their wealth or well-being. Furthermore, home equity loans are much riskier than other types of loans because borrowers’ homes are used as collateral, and they could lose their homes to foreclosure if they are unable to repay.

“Consumer debt is at a record high. At the same time, delinquency rates are rising for several types of loans which means that Main Street Americans are increasingly vulnerable to financial shocks. This proposal would add to consumers’ already high debt burdens and lead to increased financial instability for society as a whole, threatening the need for another broad-based taxpayer funded bailout.

“We urge the FHFA not to move forward with the Proposal. Homeowners already have several avenues to access home equity; they do not need another one that jeopardizes the financial stability of working Americans and the entire economy.”

Read our comment letter here.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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