https://news.yahoo.com/biden-rule-redistribute-high-risk-211102885.html

A Biden administration rule is set to take effect that will force good-credit home buyers to pay more for their mortgages to subsidize loans to higher-risk borrowers.

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, according to a Washington Times report Tuesday.

"The changes do not make sense. 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, told the Times. "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."

The Federal Housing Finance Agency, which oversees federally backed home mortgage companies Fannie Mae and Freddie Mac, has long sought to give consumers more affordable housing options. But those who work in the industry believe the new rules will only serve to frustrate and confuse people.

"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," David Stevens, a former commissioner of the Federal Housing Administration during the Obama administration, wrote in a social media post responding to the new rules. "To do this at the onset of the spring market is almost offensive to the market, consumers, and lenders."

The rules come as the housing market has struggled in the wake of multiple interest rate increases by the Federal Reserve.

Under the new rules, consumers with lower credit ratings and less money for a down payment would qualify for better mortgage rates than they otherwise would have.

Federal Housing Finance Agency Director Sandra Thompson said the new rules are designed to "increase pricing support for purchase borrowers limited by income or by wealth" and comes with "minimal" fee changes.

While Stevens agreed there was a gap in opportunity for low-income — especially minority — borrowers to qualify for affordable homes, he argued that attempting to manipulate prices was not the solution.

"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," Stevens said.

"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."

Hasn't your credit score always affected access and price of capital?

I remember having to have 1/3 down and 11% interest rate for our first house. In that context, 5-6% seems low--low down payment buyers have had to buy PMI. Our kids had easy access to mortgage money when they were approved for 110% of house price without downpayment or jobs. Her PhD and his Law degree was all they had. The 2008 crash happened soon after due in most part to these lending practices.

There has to be a happy medium between easy access and tough access. Trying to cool down inflation by interest rate hikes to affect demand needs to be transitory. I hope the early signs that the Fed process is working are true and make for a small or soft landing recession that may occur. It's better now than a year ago and demand (consumer) and prices (wholesale) are both coming down.

https://news.yahoo.com/biden-rule-redistribute-high-risk-211102885.html

A Biden administration rule is set to take effect that will force good-credit home buyers to pay more for their mortgages to subsidize loans to higher-risk borrowers.

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, according to a Washington Times report Tuesday.

"The changes do not make sense. 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, told the Times. "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."

The Federal Housing Finance Agency, which oversees federally backed home mortgage companies Fannie Mae and Freddie Mac, has long sought to give consumers more affordable housing options. But those who work in the industry believe the new rules will only serve to frustrate and confuse people.

"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," David Stevens, a former commissioner of the Federal Housing Administration during the Obama administration, wrote in a social media post responding to the new rules. "To do this at the onset of the spring market is almost offensive to the market, consumers, and lenders."

The rules come as the housing market has struggled in the wake of multiple interest rate increases by the Federal Reserve.

Under the new rules, consumers with lower credit ratings and less money for a down payment would qualify for better mortgage rates than they otherwise would have.

Federal Housing Finance Agency Director Sandra Thompson said the new rules are designed to "increase pricing support for purchase borrowers limited by income or by wealth" and comes with "minimal" fee changes.

While Stevens agreed there was a gap in opportunity for low-income — especially minority — borrowers to qualify for affordable homes, he argued that attempting to manipulate prices was not the solution.

"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," Stevens said.

"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."