The Biden administration’s disdain for responsible Americans who work hard to pay their bills on time has once again been made evident by a new federal rule that will punish homebuyers with good credit in order to subsidize borrowing costs for those who are in a riskier category by forcing them to pay additional fees.
Under a new Federal Housing Finance Agency rule set to go into effect next month that will affect mortgages that originate at private banks, loan-level price adjustments, or LLPAs will stick it to borrowers with credit scores above 680 with fees that could tack $40 per month onto a home loan of $400,000 with those making higher down payments of 15-20 percent getting socked with the largest fees in order to backstop the administration’s push for affordable housing.
The new rule, which was first reported by the Washington Times, will apply to those who are buying or refinancing homes after May 1 and has left industry experts scratching their heads over why those who have put forth much effort to maintain their credit scores are being unfairly penalized by being made to pay more for their mortgages.
“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 for Bay Equity Home Loans in the San Francisco Bay area told the outlet. “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.”
Wright said that the new rule will “cause customer-service issues for lenders and individual loan officers when a consumer won’t understand why their interest rate and fees suddenly changed.”
“I am all for the first-time buyer having a chance to get into the market, but it’s clear these decisions aren’t being made by folks that understand the entire mortgage process,” he added.
Former Mortgage Bankers Association head David Stevens who served as Assistant Secretary of Housing and Federal Housing Commissioner during the Obama administration opined that the updated fees “will create extreme confusion as we enter the traditional spring home purchase season.”
“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,” Stevens said in a social media post. “To do this at the onset of the spring market is almost offensive to the market, consumers, and lenders.”
It’s not the first time that Biden and his handlers have rewarded less responsible borrowers, with the controversial scheme to forgive the student loan debt of deadbeats drawing strong criticism of its unfairness from those who sacrificed to make good on their commitments.
The fee changes will “increase pricing support for purchase borrowers limited by income or by wealth,” said Federal Housing Finance Agency Director Sandra Thompson who was appointed by Biden.
With the Federal Reserve having moved to implement a series of interest rate hikes, the cost of financing a home has already risen considerably and the additional fee adds insult to injury.
“Why was this done? The answer is simple, it was to try to narrow the gap in access to credit especially for minority home buyers who often have lower down payments and lower credit scores,” Stevens wrote in a LinkedIn post. “The gap in homeownership opportunity is real. America is facing a severe shortage of affordable homes for sale combined with excessive demand causing an imbalance. But convoluting pricing and credit is not the way to solve this problem.”
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