According to experts familiar with the matter, borrowers with a credit score of around 680 will have to fork over an additional $40 per month on a $400,000 mortgage under the new Federal Housing Finance Agency (FHFA) scheme, which is set to go into effect on May 1.
The apparent goal of the program is to help people with a lower credit score still be able to secure a home loan. However, because it punishes people with good credit in order to so do, not everyone is pleased about it.
"The changes do not make sense," says Ian Wright, a senior loan officer at Bay Equity Home Loans, to the Washington Times. "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."
(Related: In the United Kingdom, the Boris Johnson government imposed a China-style social credit scoring system that rewards people who eat in obedience to government dictates.)
The FHFA, which oversees the federally backed home mortgage companies Fannie Mae and Freddie Mac, has been searching as of late for new ways to give consumers more affordable housing options in these overinflated market conditions, hence the new Biden plan – but will it work?
"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," said David Stevens, a former commissioner at the Federal Housing Administration (FHA) during the Obama years.
"To do this at the onset of the spring market is almost offensive to the market, consumers, and leaders."
As interest rates continue to climb, housing prices are remaining oddly stable due to real estate investment trust (REIT) schemes like those run by Blackstone. Because of this, increasingly more people who want to own a home cannot because they are priced out of a market controlled by billionaire trust funds, in essence.
Consequently, the American housing market is becoming a place where only wealthy landlords can thrive – unless you bought a house ages ago and are continuing to build up equity on your investment.
According to Federal Housing Finance Agency Director Sandra Thompson, the new plan to correct this will "increase pricing support for purchase borrowers limited by income or by wealth." And it comes with "minimal" fee changes, she said.
To Stevens, however, this is not the solution.
"Why was this done?" he asked. "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."
"The gap in homeownership opportunity is real. America is facing a severe shortage of affordable homes for sales combined with excessive demand causing an imbalance. But convoluting pricing and credit is not the way to solve this problem."
Such is life in a country controlled by private central bankers whose usurious ways involve privatizing all profits (aka loot) for the rich while socializing their losses and forcing taxpayers to foot the bill every time they overleverage themselves.
"A government redistribution charge on well qualified borrowers to manage the risk of poorly qualified borrowers and provide relief to the poorly qualified is a tax," one commenter wrote about this latest Biden scheme.
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Sources for this article include: