Biden Regime FHFA Rule: Redistribute ‘High-Risk Loan Costs’ to Homeowners with ‘Good Credit’

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Biden rule will redistribute high-risk loan costs to homeowners with good credit

Interest rates for mortgages have roughly doubled over the past year

By Michael Lee | Fox News April 20, 2023:

A Biden administration rule is set to take effect that will force good-credit home buyers to pay more for their mortgages to subsidize loans to higher-risk borrowers.

Experts believe that borrowers with a credit score of about 680 would pay around $40 more per month on a $400,000 mortgage under rules from the Federal Housing Finance Agency that go into effect May 1, costs that will help subsidize people with lower credit ratings also looking for a mortgage, according to a Washington Times report Tuesday.

“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, told the Times. “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.”

A new Biden administration rule will make borrowing for a home more expensive for those with good credit scores to subsidize loans to higher-risk borrowers.

The Federal Housing Finance Agency, which oversees federally backed home mortgage companies Fannie Mae and Freddie Mac, has long sought to give consumers more affordable housing options. But those who work in the industry believe the new rules will only serve to frustrate and confuse people.

“This confusing approach won’t work and more importantly couldn’t come at a worse time for an industry struggling to get back on its feet after these past 12 months,” David Stevens, a former commissioner of the Federal Housing Administration during the Obama administration, wrote in a social media post responding to the new rules. “To do this at the onset of the spring market is almost offensive to the market, consumers, and lenders.”

The rules come as the housing market has struggled in the wake of multiple interest rate increases by the Federal Reserve.

Under the new rules, consumers with lower credit ratings and less money for a down payment would qualify for better mortgage rates than they otherwise would have.
Sold Home For Sale Real Estate Sign and House

Federal Housing Finance Agency Director Sandra Thompson said the new rules are designed to “increase pricing support for purchase borrowers limited by income or by wealth” and comes with “minimal” fee changes.

While Stevens agreed there was a gap in opportunity for low-income — especially minority — borrowers to qualify for affordable homes, he argued that attempting to manipulate prices was not the solution.

Read more.

AUTHOR

Pamela Geller

RELATED ARTICLE: How the US is subsidizing high-risk homebuyers — at the cost of those with good credit

RELATED TWEET:

Biden is now going to force homebuyers with good credit to pay higher interest rates… to subsidize high-risk mortgage borrowers.

We are living during the worst Presidential Administration of our times.

— Ryan Fournier (@RyanAFournier) April 20, 2023

EDITORS NOTE: This Geller Report is republished with permission. ©All rights reserved.

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