A Biden administration rule set to take effect May 1 will force good-credit homebuyers to pay more for their mortgages to subsidize loans to higher-risk borrowers. Borrowers with a credit score of about 680 would pay around $40/month more on a $400,000 mortgage under rules from the Federal Housing Finance Agency (FHFA) - it oversees federally backed home mortgage companies Fannie Mae and Freddie Mac - costs will help subsidize people, with lower credit ratings, looking for a mortgage, Washington Times reported April 18. "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 in California, told The Times. "It overcomplicates things. Confusing the borrower is never a good thing." FHFA has long sought to give consumers more affordable housing options. But a former commissioner of the Federal Housing Administration, David Stevens, says this rule "couldn’t come at a worse time" for the struggling industry. The housing market has struggled after multiple interest rate hikes by the Federal Reserve. Under the new rules, consumers with lower credit ratings/less would qualify for better mortgage rates than they otherwise would have. Attempting to manipulate prices is not the solution, Stevens said. The new rules are being implemented to try and narrow the gap in access to credit, especially for minority home buyers, he said. (Fox News 04/19/23) Biden rule will redistribute high-risk loan costs to homeowners with good credit (yahoo.com)
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