The Biden administration wants to penalize homebuyers with good credit, in order to subsidize high risk buyers. This isn’t exactly like what led to the subprime mortgage crisis, but it’s just as stupid and certainly unfair.
It’s just another front on the war on merit.
The Washington Times reports:
Biden to hike payments for good-credit homebuyers to subsidize high-risk mortgagesHomebuyers with good credit scores will soon encounter a costly surprise: a new federal rule forcing them to pay higher mortgage rates and fees to subsidize people with riskier credit ratings who are also in the market to buy houses.The fee changes will go into effect May 1 as part of the Federal Housing Finance Agency’s push for affordable housing, and they will affect mortgages originating at private banks across the country. The federally backed home mortgage companies Fannie Mae and Freddie Mac will enact the loan-level price adjustments, or LLPAs.Mortgage industry specialists say homebuyers with credit scores of 680 or higher will pay, for example, about $40 per month more on a home loan of $400,000. Homebuyers who make down payments of 15% to 20% will get socked with the largest fees.The new fees will apply only to Americans buying houses or refinancing after May 1.Lenders and real estate agents say the changes will frustrate homebuyers with high credit scores and homeowners seeking to refinance because the rule punishes them for their relatively strong financial positions.“The changes do not make sense. Penalizing borrowers with larger down payments and credit scores will not go over well,” Ian Wright, a senior loan officer at Bay Equity Home Loans in the San Francisco Bay Area, told The Washington Times in an email message. “It overcomplicates things for consumers during a process that can already feel overwhelming with the amount of paperwork, jargon, etc. Confusing the borrower is never a good thing.”
The Olean Times Herald has more and even mentions our old friends Fannie Mae and Freddie Mac:
Punishing Americans with good creditThe Biden administration wants homebuyers who have good credit to cover the risks of lending to homebuyers who don’t. Congressional Republicans should stand united against this latest White House effort to erode the value of personal responsibility.The New York Post reported this week that Fannie Mae and Freddie Mac are prepared to overhaul the fees built into mortgages issued at private banks. The charges — known as low-level price adjustments — are based on a handful of factors and often absorbed into a buyer’s mortgage rate.Under the Biden plan, those with better credit scores would face additional surcharges while those with substandard credit scores would see fees cut nearly in half.“When absorbed into a long-term mortgage rate, the increase is the equivalent of slightly less than a quarter percentage point in mortgage rate,” the Post reported in reference to buyers with higher credit ratings. “On a $400,000 loan with a 6 percent mortgage rate, that buyer could expect their monthly payment to rise by about $40.”That’s nearly $14,400 over the life of a traditional 30-year mortgage.
This is such a bad idea.
Do we learn nothing from history?
CLICK HERE FOR FULL VERSION OF THIS STORY