Biden forces good-credit home borrowers to subsidize bad-credit or no-credit borrowers

President Joe Biden announced new home finance rules that force good-credit borrowers to subsidize bad- or no-credit borrowers.

Published

2 years ago

April 21, 2023

Terry A. Hurlbut

President Joe Biden has promulgated new rules to charge more to borrowers with good credit. The proceeds from these fees will subsidize borrowers with bad or no credit.

Biden and the deadbeats

Fox News announced the new rules on Wednesday afternoon. They paraphrase from The Washington Times:

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.

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. Ian Wright, senior loan officer, Bay Equity Home Loans, in an interview with The Washington Times

Biden to reward bad credit buyers and punish those with good credit.

"It’s unprecedented,” added David Stevens, (Obama's FHA commissioner) “My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move."https://t.co/cGDBR0SS1M— Mark Mendlovitz (@MendlovitzMark) April 20, 2023

I'd like to see Democrats like you dare to defend this, @Garrett_Archer . This is such anti-merocratic punishment. It's what the Biden administration and so-called progressives want for America. Success and merit shall be punished. Disincentivize good behavior.— Mark Mendlovitz (@MendlovitzMark) April 20, 2023

"We're all seeing the home sales data and seeing how much home sales are declining because of these rising interest rates. And now we're adding the second whammy to good credit worthy homebuyers who are now going to have to pay for other people's mortgages."#AmericaReports— America Reports (@AmericaRpts) April 20, 2023

David Stevens, Obama’s Commissioner of the Federal Housing Administration, said an earful. For unclear reasons, his original social media account is not available, but Fox News has the texts:

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.

The defense

Sandra Thompson, Director of the Federal Housing Finance Agency, defended the new rules, saying they will:

increase pricing support for purchase borrowers limited by income or by wealth.

David Stevens is having none of it.

Why was this done? 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.

Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.