The Federal Housing Finance Agency (FHFA) on Friday announced that it has given conditional approval for Freddie Mac to begin purchasing closed-end second mortgages through a pilot program.

The pilot program includes several limitations to the types of loans the government sponsored enterprise will be allowed to purchase.

The program is only for primary residences and the first mortgage must have a minimum seasoning period of 24 months. The maximum loan amount is $78,277. Freddie Mac will be allowed to purchase up to $2.5 billion in second mortgages over a period of 18 months.

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