Put some spin on it

As if inflation and rising interest rates weren’t enough. This would really tick me off if I were shopping for a home mortgage right now…

Recently, the Federal Housing Finance Agency adjusted its fee schedule for borrowers seeking a home mortgage.

The gist:
If you close on your home loan after May 1st and you are a responsible borrower with a good credit score, your “reward” is that you now get to pay more in fees for loans underwritten by Fannie Mae & Freddie Mac than you would have if your loan had closed by April 30th. Prospective borrowers with lower credit scores will now see their fees drop as much as 1% for a similar loan.

You may ask yourself: “Why are we rewarding folks who demonstrate riskier financial behavior when it comes to home mortgages with lower fees and penalizing more financially prudent folks with higher fees?

The spin:
Several financial talking heads swear this was not been done to penalize people with good credit scores, Jim Parrott at the Urban Wire writes, “Despite the recent coverage…FHFA is not raising fees on borrowers with good credit to lower them for those with bad credit. It is raising fees on loans there is little reason to discount so that it can better serve those who need the help.” Isn’t this the same thing?

In a press release dated April 25, 2023​ the FHFA Director states, “Higher-credit-score borrowers are not being charged more so that lower-credit-score borrowers can pay less.” She later goes on to add, “The updated pricing framework will further the safety and soundness of the Enterprises, which will help them better achieve their mission. They will provide reliable liquidity to the market while also providing more targeted support for creditworthy borrowers limited by income or wealth.

Spin it whichever way you like. Use whatever accounting shell game you like. At the end of the day, responsible borrowers with higher credit scores are still now required to pay more to shore up Fannie Mae and Freddie Mac and some of those funds will go to help subsidize a specific subset of borrowers. Equity in action.

At least be honest about it. We’re not stupid.

Keep removing the incentives for people to work and be financially responsible, and we’ll really be in a pickle when no one’s working to pay the bills.

Did you see this? Income based electricity pricing proposed in California One more reason people are leaving this state in droves.

One thought on “Put some spin on it

  1. We call men women and women men and unborn babies clumps of cells. Why shouldn’t we be surprised that charging someone more for a mortgage is called “updated pricing”? It’s an upside down world we live in!

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