Borrowers With Good Credit Scores to Foot the Bill for Higher Risk Borrowers
It is disheartening to think that those of us who have worked hard to maintain good credit scores will now be penalized with higher mortgage rates and fees, just so the government can subsidize people with riskier credit ratings. It’s no surprise that the Federal Housing Finance Agency’s (FHFA) new rule forcing homebuyers with good credit scores to pay higher mortgage rates and fees is causing a stir. The Federal Housing Finance Agency’s push for affordable housing is admirable, but it should not come at the expense of those with good credit scores who are trying to buy or refinance their homes.
This fee increase affects all mortgages originating at private banks across the country. The loan-level price adjustments that will be implemented by Fannie Mae & Freddie Mac on May 1st will disproportionately affect those with credit scores above 680 and down payments between 15-20%. This means that individuals who have worked hard to maintain their financial responsibility through responsible borrowing habits are now being punished for doing so.
In response to FHFA’s new rule, Brian Stevens of NREP daily has started a petition calling out FHFA on their unfair loan level price adjustment on mortgagees with good credit scores – something we can all agree needs attention from our lawmakers as soon as possible! It’s simply not right that responsible borrowers should have to bear an extra financial burden just because some don’t follow through on their obligations.
Homebuyers with credit scores of 680 or HIGHER will pay, for example, about $40 per month more on a home loan of $400,000. Homebuyers who make down payments of 15% to 20% will get socked with the largest fees, to SUBSIDIZE people with RISKIER credit ratings who are also in the market to buy houses.
Lenders and real estate agents say the changes will frustrate homebuyers with high credit scores and homeowners seeking to refinance because the rule PUNISHES homeowners and buyers for their relatively strong financial positions.
ACT NOW! The fee changes will go into effect on May 1, 2023, as part of the Federal Housing Finance Agency’s push for affordable housing.
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Good thing I paid my house off 20 years ago. When the market crashed last time my CC rates went up. I called on one of them and told them that I had never missed a payment and paid my card off every month; I also have an 816 FICO. The lady told me that the only way they can recover some of the loss was to charge good clients more because of the bad clients. I cut up the card and sent it back.
17 years ago, my wife had a simple surgery ($30,000 for 2 hours), the insurance company told me not to pay the hospital anything because they were double charging me, and billing for things we did not have. When I talked to accounting the lady told me that they over bill people with good insurance so that they can recoup part of the loss from the people who do not have insurance. After my insurance company got done with them the bill went from $30,000 to $4,000.
Nothing is free someone will be paying for it.
CJK, I’ve got a meme for that, lol. More government intervention results in less efficient systems, every last time. Central planning never works. Socialized medicine worked so well. They’re going to fix lending next.
This cannot be allowed to stand!!!
Insanity!
Penalize good stewards and reward malcontents!!!
Sign and share the petition please!!! https://www.change.org/p/stop-the-fhfa-s-unfair-loan-level-price-adjustments-on-mortgagees-with-good-credit
Signed it. Why did Hamps petition shut down? People should also consider starting white house dot gov petitions as well.
Already over taxed.
Seems legit. We are now living in bizarro world after all.
Men are women
Spending is saving
Censorship is freedom
Good credit is bad credit
Just when you thought things couldn’t get any crazier!
Signed
Does anybody still doubt that we are ruled by Communists? Moral hazard is now a feature of government policies.
I think they pushed it back to August first. Several national news stories have came forth. Review the LLPA, loan level price adjustment spread sheet. First link is a notice about some delay in implementation. I’m not sure exactly, does this mean the entire thing is delayed or just part of it?
https://capitalmarkets.fanniemae.com/mortgage-backed-securities/timing-update-loan-level-price-adjustment-framework
LLPA matrix.
https://singlefamily.fanniemae.com/media/9391/display
Related.
https://web.archive.org/web/20230504012456/https://selling-guide.fanniemae.com/Selling-Guide/Selling-Securitizing-Delivering-Loans/Subpart-C1-General-Info-Execution-Options-Loan-Delivery/Chapter-C1-1-Execution-Options-Overview/1121260591/When-is-a-loan-level-price-adjustment-required.htm
Take note the over four point jump for investment housing second housing slots. Kiss your dreams of financing an investment property good bye. One may have equity but tapping into that now comes with a penalty rate if one crawls into higher ltv territory. If I’m reading the tables correctly it appears that vested interests and low ltv borrowers will skate by without much harm. First time buyers are going to get hit the second hardest, right after those seeking to leverage for investment properties. The cash out crowd, toast, finished, burnt.
This is a big step towards socializing the conventional mortgage lending sector, and it’s only round one. They’ll expand the scale and scope of the peramiters, eventually even low ltv will be subjected to this scheme. While lenders continue to skate away with a mountain of cash, as cash equivalent amortized payments over the full term increases. That only forty dollars a month thing they put out is bread for the masses. Instead, ask for the cash equivalent payment amount over the full term, based on the best rate, compare that to the new higher rate. The difference will be substantial. It seems like just last year that we dropped $6,000 additional principal, just to save $50 a month on our monthly refinanced payment figures.
To the wealthy scheming bureaucrats, the penalties applied may seem inconsequential. To responsible rate payers, this is incredibly offensive and unethical. This is just like the student loan payoff, it’s unconstitutional. Why should responsible people suffer an additional burden? We paid our loans while those with poor credit were living the high life, partying, living on credit which they did not have adequate means to actually repay. Those subjected to this scheme will be paying the equivalent of buying down the lending rate for a complete stranger. Gratuity payments for those with poor credit.
This will definitely motivate people to get their act together and maintain better credit, without a doubt. Once a person gets a mortgage, doors of new credit opportunity abound like never before. Now if those with poor credit can’t manage their score without a mortgage, imagine how well they’ll manage additional debt and responsibility with a mortgage, discounted to boot. These programs will actually cause an acceleration of risk which will fuel additional losses, which will in turn require an even higher penalization of responsible rate payers to cover the difference. Equity! More like another tired round of poisonous protectionism brought to us by incompetent bureaucrats. What happened to reigning in payday lending, and predatory lenders whom cause all this credit damage to impoverished people in the first place?
Strike the above speculation. I read the greater than less than incorrectly. Low ltv will not be effected, but those with equity will get sacked with point penalties and such? Why?
The old “b” and “c” credit scam in reverse. And we all know what that resulted in.
2008 repeat… giving unqualified people equity on the backs of others. Socialist agenda. Wealth transfer. Despicable
It’s only fair people. Why should borrowers with bad credit have to pay a higher rate than those with good credit. That’s discrimination! Biden to the rescue!!!!!
Here is another explanation:
https://www.mortgagenewsdaily.com/markets/mortgage-rates-04212023
This one is more B S
Pat if you are going to read it, I will too. Like the author truly has a world view in favor of socialistic models, rather than capitalistic models. You’re just confused, because your mind is holding onto the ideas of fairness, equality, and just rewards from within the confines of the now antiquated late stage capitalistic model. Stare at the chart long enough, it confuses anyone who’s not intricately familiar with LTV calculations.
Loan to value ratio calculator.
https://www.bankrate.com/mortgages/ltv-loan-to-value-ratio-calculator/
My initial presumption was correct this hits first time borrowers and those with only moderate down payments the most?
So in the governments infinite wisdom, rather than being transparent so people could simply voluntarily improve their credit under known and well understood peramiters, we’ll just switch to a socialistic equity model, so as not to bother the credit reporting agencies with any transparency requirements. Because if people can not access best rates under the credit reporting system, that’s not the credit reporting agencies fault, or predatory agencies whom ruin peoples credit. It’s the fault of the people whom have successfully navigated those credit based systems. Equity is taking on new and interesting meanings. Today it means the government is powerless to reign in corruption and the strangle hold major corporations have on our lives, so the only way to effect change is to levy additional taxes on the middle class. More equity!
Did you see the final episode of tucker carlson? He covered the appraisers are racist false accusations. Coincidence? Felt like the twilight zone, like for real? Standing up for appraisers was the final straw for the most popular renowned talk show host in the entire world? Don’t miss the final tucker carlson which aired friday 04/21/2023. You can find full episodes from pop up accounts on youtube.
One more way to make money off we the people.
https://www.zerohedge.com/political/bidens-credit-score-screw-job-mortgage-pricing-even-legal
Related.
Oh wait, did I confuse greater than less than indicators? I may have.
So first time buyers get no extra hits, but if you flip the majority equity in your home into a new loan, one gets hit with the additional charge?
Good credit buyers will be pushing lower offers to pass off the loss of purchasing power?
We need a mortgage calculator which will actually allow us to play with the numbers. Does a low fico score drive your rates up as much as the benefit of the rate reduction?
https://mailchi.mp/de8345edd4ea/states-push-back-on-bidens-woke-mortgage-equity
https://freebeacon.com/biden-administration/unconscionable-states-challenge-bidens-plan-to-punish-home-buyers-with-good-credit/
34 state financial officers from 27 states agree and have signed a letter to Biden demanding he end this woke insanity.
As the letter reads:
The policy will take money away from the people who played by the rules and did things right — including millions of hardworking, middle-class Americans who built a good credit score and saved enough to make a strong down payment. Incredibly, those who make down payments of 20 percent or more on their homes will pay the highest fees — one of the most backward incentives imaginable.
This new policy is a slap in the face to every consumer in the nation who worked hard to develop a good credit score. Forcing them to subsidize lower scored buyers adds insult to the injury of the higher fees they are now required to pay.
This is the latest in a disturbing pattern of Biden’s intervention into the lives of hard-working Americans in order to push the progressive social agenda. Under Biden, the economy is in shambles and policies like this aren’t going to save our country from spiraling out of control.
Instead of working to reduce the out-of-control inflation that is harming credit scores for many borrowers, Biden has chosen to divide Americans by pitting them against each other during the home buying process.
Consumers’ Research stands with and thanks the principled state financial offers who are taking a stand for American consumers. As their actions show, more and more Americans are waking up and saying “No More” to this woke nonsense.
The letter.
https://twitter.com/WillHild/status/1653031906454171649?cxt=HHwWgsCzqdjw3_AtAAAA
Breaking News: FHFA Rescinds DTI-Based LLPAs
https://nationalmortgageprofessional.com/news/breaking-news-fhfa-rescinds-dti-based-llpas
Holy smokes! Great news! I was personally already researching class action suits our family could join, the proposal was clearly unconstitutional. That rule would have derailed over twenty years of dedicated effort and careful planning for us personally. Finally a little relief. Now who’s going to stop the ridiculous appraisal modernization, stop these corrupt appraisal management companies?
http://www.1360khnc.com