Chris Lange, FISM News
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Prospective home buyers burdened by mortgage interest rates that have nearly doubled under the Biden administration, specifically those who have a history of paying their bills on time, will soon face another hurdle to home ownership.
Effective May 1, home buyers who have good credit scores will be required to help those who don’t pay their mortgages, all in the name of – you guessed it – “equity.”
The new rules from the Federal Housing Finance Agency (FHFA), which oversees federally funded home mortgage companies Fannie Mae and Freddie Mac, come in the form of revised loan-level price adjustments (LLPAs).
The new LLPAs will allow consumers with poor credit scores who can’t afford downpayments to qualify for mortgages for which they would have historically been denied. Biden’s latest wealth distribution policy, however, places yet another financial burden squarely on the backs of hard-working Americans already struggling under inflation and soaring consumer costs.
Federal Housing Finance Agency Director Sandra Thompson said the LLPA adjustments are designed to “increase pricing support for purchase borrowers limited by income or by wealth,” per Fox News. She described the fee changes as “minimal.”
Under the policy revision, borrowers with credit scores starting at around 680 and up will be forced to pay an extra $40 per month on a $400,000 mortgage, The Washington Times reported this week. The New York Post separately noted that the hardest-hit consumers will be mortgage applicants who make downpayments in the range of 15% to 20% of a home’s value.
Much like Biden’s student debt forgiveness program, the policy exacts a penalty on responsible Americans who work hard and pay their bills on time.
“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.”
The news also comes as a major blow to a housing market struggling to stay afloat amid multiple interest rate hikes by the Federal Reserve. The average 30-year mortgage rate was about 6.27% as of last week – more than double the rate two years ago – according to Freddie Mac mortgage rate data.
David Stevens, a former commissioner of the Federal Housing Administration during the Obama administration, called the new policy “unprecedented” in remarks carried by the Post.
“My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move,” Stevens said.
A mortgage loan originator based in Arizona told the Post: “It’s going to be a challenge trying to explain to somebody that says, ‘I worked my whole life for high credit and I’ve put a lot of money down and you’re telling me that’s a negative now?’ That’s a hard conversation to have.”