Helping fuel another subprime mortgage crisis is apparently now on the economic agenda of Biden's Federal Housing Finance Agency.
On May 1st, Fannie Mae and Freddie Mac are going to change fees that will affect new mortgages originating from U.S. banks that will have the effect of charging those with good credit more to subsidize borrowers with low scores.
Under the new guidelines, someone with a 620 FICO score and a 5% downpayment would get a 1.75 point reduction on personal mortgage insurance (PMI) fees. Meanwhile, those with a 740 or above with 15-20% down will pay a 1% surcharge on their new loan, a quadrupling from the current 0.25% fee.
According to Reason’s Elizabeth Nolan Brown:
The fee increase is unlikely to lead to significantly higher monthly mortgage payments for most borrowers. For instance, someone with a $400,000 loan and a 6 percent mortgage rate may wind up paying about $40 more per month. But an extra $40 per month means an extra $480 per year. And over the whole course of mortgage repayment, a homeowner could wind up paying thousands of dollars more due to the fee shift.
The obvious economic unfairness of the move aside, I think we all remember what happened the last time the government played God with the economy to boost homeownership among those who can least afford it.
Matt Palumbo is the author of Fact-Checking the Fact-Checkers: How the Left Hijacked and Weaponized the Fact-Checking Industry and The Man Behind the Curtain: Inside the Secret Network of George SorosDon't miss the Dan Bongino Show
