(RepublicanNews.org) – President Joe Biden’s plan to force responsible homeowners to subsidize the mortgages of those with risky credit is angering homebuyers, and Republicans want answers.
The new rule upends all conventional lending and risk practices and reverses them. A buyer’s credit score is a reflection of his or her ability to pay debts in a timely way and manage their money. Those with higher credit scores get lower interest rates on loans such as mortgages and car loans because the bank knows they’re at less of a risk to default on the loan.
Not now, under the new rules from the Federal Housing Finance Agency. Borrowers with good credit will be asked to pay more in order to subsidize lower-interest loans for those with worse credit. It punishes the financially responsible and encourages riskier borrowing behavior from those who have not shown they can handle their financial responsibilities.
Republican Senator Tim Scott of South Carolina wants the Biden administration to explain why it is rewarding bad financial behavior and punishing responsible behavior. He told Fox News that the White House’s financial policies “have spurred inflation and hurt markets.”
Scott said the new rule will create more risk of defaulting on mortgages while making it more expensive for families with good credit who are trying to buy a home.
Scott sent a letter to FHFA director Sandra Thompson on May 8th. The letter asks for answers about why the agency decided to raise fees for those with good credit while making loans cheaper for people with worse credit.
The FHFA has said directly that it intends to “increase pricing support” for borrowers that it euphemistically describes as “limited by income or wealth,” suggesting that some outside force is doing harm to these low-credit borrowers.
Would-be borrowers with good credit are not happy. El Paso resident Jose Costemalle told a local news station the rule is not fair. It punishes people who have worked to achieve a good credit score, even if it gives others an “opportunity.”
Copyright 2023, RepublicanNews.org