Home buyers are angry about Biden’s new ‘responsibility tax’ on buyers with good credit, who will pay an additional $40/mo. to make up for buyers with bad credit.
Biden’s New Controversial
A new rule from the Biden administration will have good-credit home buyers paying more monthly to subsidize costs for high-risk buyers.
New federal rules from the Federal Housing Finance Agency, which is Fannie Mae and Freddie Mac, which control 60% of the housing mortgage market, go into place May 1.
If you have improved your credit score to 680 or higher, or if you have made a down payment of 15-20%, you will be penalized with a higher mortgage interest rates and new large fees on the transaction.
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.
According to financial experts, the new rule appears to punish home buyers with a strong financial position.
According to Larry Kudlow of Fox Business, he says this move by Biden’s administration is what’s called a “responsibility tax“, saying that this will further attack the middle-class who’ve played by the rules, worked hard and planned for retirement.
Mortgage Companies Were Shocked
“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.”
“It’s unprecedented,” David Stevens, a Federal Housing Administration commissioner during the Obama administration, said, according to the New York Post. “My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move.”
Stevens estimated a buyer taking out a $400,000 loan with a 6 percent mortgage rate would pay $40 more per month. Over the 30-year term of a mortgage, that would come out to $14,400.
You can read the Fannie May Loan-Levl Price Adjustment Matrix, here.
How The Change Impacts Buyers
“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.”
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.
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