Home buyers with good credit will soon be forced to pay more for their mortgage in order to subsidize the costs associated with higher-risk borrowers, due to a Biden administration rule that is about to take effect.
The changes have been described as unfair and unnecessarily complicated by industry professionals. According to Strategic Wealth Partners CEO Mark Tepper, who appeared on Fox News’ Mornings with Maria, the changes are “socialism for homebuyers.”
“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.”
BYPASS THE CENSORS
Sign up to get unfiltered news delivered straight to your inbox.
You can unsubscribe any time. By subscribing you agree to our Terms of Use
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.
Yahoo report: 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.
