(RepublicanNews.org) – President Biden took many by surprise when he announced this week that homebuyers with good credit will be forced by the government to subsidize lower interest rates for those with bad credit, and Republicans are fighting back.
The Federal Housing Finance Agency (FHFA) announced a new policy that would financially penalize buyers with good credit in order to finance lower-interest-rate mortgages for those with bad credit. For example, a person with a credit score of 680 would pay about $40 more a month than someone with worse credit on a $400,000 loan.
This policy directly reverses the normal way in which interest rates are offered. Lenders evaluate a buyer’s credit history to determine how likely it is that the borrower will be able to pay the loan off. Those with good histories of repayment are rewarded with lower interest rates.
The federal government’s policy turns that on its head, punishing responsible borrowers for the irresponsible behavior of others. Republicans are not having it.
Stephane Bice, a Republican Rep. for Oklahoma, told Fox News that President Biden was fostering a “culture of dependency”. The administration’s attempts to “forgive” student loans, and now to make responsible borrowers pay for irresponsible borrowers, she said, is an attempt to bypass Congress and change how the U.S. operates.
“We should not punish individuals who have made sound financial decisions or have the government incentivize lowering credit scores,” Bice said.
Bice introduced the Free Market Mortgage Act of 2023, which would repeal any policy the FHFA brings out to subsidize poor-credit borrowers. Six other Republicans are co-sponsoring the bill.
Predictably, GOP lawmakers have railed against the proposed policy, but some Democrats are also unhappy with it. Obama-era FHFA director David Stevens said there were better ways to help “minorities” achieve home ownership, and “this is not the way to do it.”
House Financial Services Committee chair Patrick McHenry (R-NC) warned the FHFA that Congress would act if the agency tries to instate the rule.
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