{"id":3073,"date":"2023-06-26T22:11:04","date_gmt":"2023-06-27T02:11:04","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=3073"},"modified":"2024-04-25T23:17:36","modified_gmt":"2024-04-26T03:17:36","slug":"did-biden-raise-mortgage-fees-for-borrowers-with-good-credit-to-help-people-with-bad-credit","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/did-biden-raise-mortgage-fees-for-borrowers-with-good-credit-to-help-people-with-bad-credit\/","title":{"rendered":"Did Biden Raise Mortgage Fees for Borrowers With Good Credit to Help People With Bad Credit?"},"content":{"rendered":"\n
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True or False?<\/figcaption><\/figure>\n\n\n\n

In May 2023, Fannie Mae and Freddie Mac rolled out a new upfront fee structure for mortgages. Some critics have claimed President Joe Biden is helping people with bad credit at the expense of people with good credit. Some call it the Biden Rule \u2014 a green light for risky borrowers, and a sign that a new housing crisis is around the corner.<\/p>\n\n\n\n

In April, a group of U.S. senators wrote a letter to the director of the Federal Housing Finance Agency (FHFA) to call the new fee structure \u201ca perverse incentive that punishes hardworking Americans for their fiscal prudence.\u201d<\/p>\n\n\n\n

When the changes are broken down, a more nuanced picture emerges. Let\u2019s take a look.  <\/p>\n\n\n\n\n\n\n\n

What Just Changed?<\/h2>\n\n\n\n

What changed is something called the loan-level price adjustment (LLPA). The adjustment impacts the charges known as upfront fees.<\/p>\n\n\n\n

The fee structure adjustment \u2014 which only impacts mortgages with terms longer than 15 years \u2014 modifies fees for buyers at closing. These upfront fees are made up of lenders\u2019 expenses, inspections and appraisals, and the home buyer\u2019s earnest money.   <\/p>\n\n\n\n

The whole thing might have gone largely under the radar, but for an article in the Washington Times<\/em> with the startling title \u201cBiden to Hike Payments for Good-Credit Buyers to Subsidize High-Risk Mortgages.\u201d The Times <\/em>said the FHFA\u2019s fee modifications would make buyers with high credit scores “subsidize people with riskier credit ratings who are also in the market to buy houses.”<\/p>\n\n\n\n

Some members of Congress quickly made moves to introduce bills to undo the mortgage fee changes<\/a>. A coalition of state level officials<\/a> also weighed in, and they\u2019re currently challenging the upfront fee changes. They\u2019ve claimed that the changes are unfair, and that they could create a \u201cdisaster\u201d in this time of higher interest rates and a possible looming recession.<\/p>\n\n\n\n

Was the White House Involved in These New Fee Changes?<\/h2>\n\n\n\n

The FHFA made the changes. This federal housing agency announced the changes in January 2023. The changes were not made by Joe Biden.<\/p>\n\n\n\n

Yes, the agency\u2019s director is a Biden appointee. Yes, the changes tend to reinforce White House housing policy<\/a>. Still, the FHFA is an independent federal agency, separate from the White House.<\/p>\n\n\n\n

The Federal Housing Finance Agency has consistently laid out its rationale for modifying the mortgage fees it sets. So, we\u2019re able to take a look at both the backstory and the agency\u2019s current reasoning with our readers. Let\u2019s take a look.<\/p>\n\n\n\n

Hasn\u2019t the Federal Government Done This Before?  <\/h2>\n\n\n\n
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In late October 2022, the Federal Housing Finance Agency did scrap all upfront fees for most U.S. buyers who (a) are categorized as first-time buyers, and (b) have earnings no higher than the area median income. That\u2019s the midpoint income for the local population.<\/p>\n\n\n\n

Other people who do not have to pay upfront fees since October are customers for the following loans:<\/p>\n\n\n\n