In a quiet move underreported by the mainstream media, reminiscent of the 2008 financial meltdown and housing market crash, the Biden administration will now begin charging homebuyers with better credit ratings to pay more to subsidize those with lesser credit looking to also buy a home.
As part of a new move by the Federal Housing Finance Agency that will take effect starting May 1st, affecting mortgages held at private banks across the U.S., with federally backed home mortgage companies Fannie Mae and Freddie Mac enacting the loan-level price adjustments (LLPAs) – who control 60% of the housing mortgage market.
Effectively, this will enable homebuyer’s local bank to issue mortgage loans to people with low credit scores by paying the fee for those high-risk loans.
‘Mortgage industry specialists say 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,’ The Washington Times wrote.
This could even equate to $100 a month or more depending on the size of the loan.
These new fees will only apply to Americans buying houses or refinancing starting on May 1st.
Furthermore, homebuyers with riskier credit ratings and lower down payments will now qualify for better mortgage rates and discounted payments.
Ian Wright, a senior loan officer at Bay Equity Home Loans in the San Francisco Bay Area, blasted this new move in a statement to The Washington Times.
The changes do not make sense. Penalizing borrowers with larger down payments and credit scores will not go over well.
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.
[This 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.
When a lender is quoting a borrower, there’s a lot they don’t know yet, such as what the property taxes and insurance payments are per month. Changes happen to the mortgage payment and income during escrow, so this will cause frustration to borrowers and lenders for the sudden rate/fee changes. Most of us loan officers will then say let’s ‘eat’ the cost for the borrower to keep them happy (resulting in losses for the lender and loan officer).
Wright said
David Stevens, a former head of the Mortgage Bankers Association who served as commissioner of the Federal Housing Administration during the Obama administration, also condemned the move.
[This] 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. To do this at the onset of the spring market is almost offensive to the market, consumers, and lenders.
‘Federal Housing Finance Agency Director Sandra Thompson, a Biden appointee, said the fee changes will “increase pricing support for purchase borrowers limited by income or by wealth.” The agency calls the overall fee changes “minimal” and said the moves will ensure market stability,’ the Washington Times reports.
Lena Petrova, a certified personal account (CPA), also expressed her frustration with this new move, saying that this move is “truly unprecedented in a free market economy,” and that this overall is nothing more than “wealth redistribution” by basically taxing those with good credit to lower costs for those who have poor credit.
The new rule has absolutely nothing to do with capitalism: it is pure socialism by definition.
Petrova said
Petrova provides a more thorough synopsis on this rule in a short video briefing:
AUTHOR COMMENTARY
As a dog returneth to his vomit, so a fool returneth to his folly.
Proverbs 26:11
Here we go again, the nightmare has come back. This is quite LITERALLY a repeat of the 2008 housing market crash: shelling out subprime mortgages to the cart pushers and burger flippers, for homes they had no business paying on; but banks got greedy and allowed it to happen. Now the Biden regime is forcing hard-working, middle class buyers, who are frugal and saving their money, to pay for people to get homes they have no business getting involved with!
And just like before, our old “friends” Fannie Mae and Freddie Mac are leading the charge straight into the ravine!
Poverty and shame shall be to him that refuseth instruction: but he that regardeth reproof shall be honoured.
Proverbs 13:18
Kudos to Ms. Petrova for keeping a straight face during her briefing, because this is just absurd.
What makes this even worse, is not only was the housing market bubble a problem unfolding right now, with mortgage rates around 6.5% at the moment, and at one point were at 7% a month ago – this will obviously add lot of stress to this market in the months to come; but then you have subprime auto loan problem that is really starting to show signs of problems now; a commercial real estate and office occupancy bust the likes of which we have not seen before; inflation that is still high and is not going to stop as the money printers keep printing, and banks are allowed to hold 0% capital reserves; countries moving out of the dollar; higher interest rates that are set to go higher; consumer credit and debt defaults, and bankruptcies; banks that have no savings, no in flows of deposits but massive withdrawals, who made plenty of risky investments of their own, and bonds, treasuries, securities that are no worth a lot less because of higher rates – all of which are leading towards a supernova banking collapse the likes of which we have never seen before.
The economy is coming down HARD and FAST, and you MUST align yourself on the right side of this thing megalodon of a disaster soon coming to a shore near you…
By faith Noah, being warned of God of things not seen as yet, moved with fear, prepared an ark to the saving of his house; by the which he condemned the world, and became heir of the righteousness which is by faith.
Hebrews 11:7
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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I saw this on YouTube. I was very shocked because the governemnt is punishing the good borrowers to help those with poor credit scores. Yes I have a credit card (my credit card bill isn’t that much and it will be paid off quickly), however I don’t have a mortgage. I saw what Dave Ramsey said about the mortgages and the Silicon Valley bank collapse and I was shocked. Thank you for opening my eyes, and now I will be more careful.