That means 2nd mortgages will become cheap enough to make 3rd mortgages competitive.

This will drive up inflation.

What does the schiffster say about it?

The mortgage rates in the US nearly tripled from Summer 2020 to Fall 2023. While at the same time property values went up nearly double. Folks who took out first mortgages within the 2-4% range wont dare refinance to cash out money at todays rates. They retain their low rate first mortgages, and opt to take out a new 2nd loan to tap that equity. When you see Gov-sponsored entities step in to guarantee loans (which also means lenders must underwrite to the govs standards), it usually means the lenders need to offload the loans underwritten to these standards and create liquidity to fund more 2nd loans. In any case, more importantly, Good Morning!

Seems like a bad idea.

But on the other hand the government is de risking stupidity, so that banks can make fake money out of property futures, which reduces the wealth of people who have to use a second mortgage as a cash flow tool

Brrrrrr

What can go wrong? Cough cough 2008 cough...