US Approves Freddie Mac Pilot Program to Buy Second Mortgages

US regulators have authorizeda pilot program for housing giant Freddie Mac to buy second mortgages, a shift that could ultimately make it cheaper for households to borrow against the equity in their homes.

The Federal Housing Finance Agency said in a statement Friday that Freddie Mac could buy as much as $2.5 billion of the mortgages over the 18-month trial period. The regulator will then evaluate the program to see if it has benefited borrowers in rural and underserved communities, among other criteria.

Freddie Mac in Aprilproposed backing second mortgages after the steep jump in home-loan rates over ...