As we recently pointed out, the Biden administration wants people with good credit to carry the burden for high risk mortgages.
This progressive ‘equity’ policy is making its way into housing and finance, and it’s terrible.
Now, over two dozen financial officers from multiple states have signed a letter objecting to the idea.
The Daily Signal reports:
‘Disaster’: State Financial Officers Slam Biden Admin’s ‘Upside Down’ Mortgage PolicyA new Federal Housing Finance Agency policy that took effect Monday “will have the net effect of making it significantly more expensive for people with good credit to buy houses,” according to almost three dozen state financial officers.Thirty-four state financial officers shared their “deep concern with the new Federal Housing Finance Agency policy” in a letter sent Monday to President Joe Biden and Sandra Thompson, director of the Federal Housing Finance Agency. The agency announced the policy in January.“This new policy will force homebuyers with good credit to pay more on their mortgage every single month,” the letter says. “In other words, the policy will take money away from the people who played by the rules and did things right—including millions of hardworking, middle-class Americans who built a good credit score and saved enough to make a strong down payment.”“For decades, Americans have been told that they will be rewarded for saving their money and building a good credit score. This policy turns that time-tested principle upside down,” the letter adds.“It is already clear that this new policy will be a disaster,” the letter also said.
You can read the full letter here.
FOX Business has more:
The state finance officers blasted the plan for turning the normal system of home buying incentives “upside down” by hurting people who make sound financial decisions.”[T]the policy will take money away from the people who played by the rules and did things right – including millions of hardworking, middle-class Americans who built a good credit score and saved enough to make a strong down payment,” they wrote. “Incredibly, those who make down payments of 20 percent or more on their homes will pay the highest fees – one of the most backward incentives imaginable.”It noted that the forced extra payments will be used to hand out “better mortgage rates to people with lower credit ratings. Others have said the plan would make it easier for people with shaky credit histories to afford more expensive mortgages, a move that could put more people at financial risk.The state officials said that while expanding homeownership is a worthy goal, the forced subsidization of risky loans isn’t the way to do it.
If the Biden administration wants to do something about housing, they should try to find ways to make it easier for builders to create it.
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