Got good credit? It'll cost ya

 The latest 'you can't make this up" moment under the Biden admin......

Mortgage borrowers with good credit may face higher costs under a new scheme from federal mortgage associations Fannie Mae and Freddie Mac. The firms have released a new Loan–Level Price Adjustment (LLPA) Matrix for loans sold to them after May 1, 2023. Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

"It's unprecedented," David Stevens, a former federal housing commissioner and former CEO of the Mortgage Bankers Association, told the New York Post. "My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move."

LLPAs are upfront fees based on factors such as a borrower's credit score and the size of their down payment. The fees are typically converted into percentage points that alter the buyer's mortgage rate.

Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%….

Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates. For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket.

Joe Biden's America.

Damn , I have good credit 

Just setting up the low FICO score holders to get burnt in years time. This is how they keep pumping RE purchases to try to avoid a crash. Everyone who's smart with their money (high FICO scores) are not buying RE right now. So the only way to get new suckers in the market is to try to suck in the low FICO scores with more false promises. Same shit as what lead to the 08 crash. Banks loosen the lending requirements for the 500-600s which pushes prices up even more before the adjustable rates kicked in years down the road.  People never learn. This is a last ditch effort to keep sales pumping to try to save the economy. Just buying time while digging the hole deeper. 

Bidens America is all backwards. 

So this is a Biden initiative? Last I checked the previous guy appointed people, the GOP has control of half the process. I love it when partisan false generalizations are thrown around for fun.

@wallstreetcappers

 Hey Wally, I am trying to find out who the previous guy's appointed people are.  Could you please point me in the right direction?  

I found this link https://www.usgoldbureau.com/news/biden-administration-punishes-borrowers-with-good-credit  

and this one on the Federal Housing Finance Agency https://www.washingtontimes.com/news/2023/apr/18/joe-biden-hike-payments-good-credit-homebuyers-sub/

and then this one on the head of the FHFA https://www.fhfa.gov/AboutUs/Pages/Leadership-Organization.aspx

If the FHFA is not the right agency to look at here then which one is?  I guess that's why the help is needed....thanks 

Only the very 'Much Smarter than You' Lefties can hatch schemes like this to seriously punish home buyer's who have paid their bills in a timely manner.

@kcblitzkrieg

 Did you read the full message? You cant blanket partisan blame EITHER political party because both have inputs in most every aspect. Did you answer the question or just try to hit on a few words and completely miss the content of my reply?

Was this a Biden initiative, did he directly push this forward and market it to the public? 

To me the aspect of making closing costs less for those with less means isnt a terrible thing, the purpose of most costs are to serve a purpose..so like PMI covers mortgage insurance, title costs are for admin and research work. The purpose of that fee might be important and if the cost is less severe for those with less money I dunno Ive heard better whining rants about Biden than this.

You bust your ass working ... you pay your creditors...establish good credit.. do the right thing..save to buy a home for what??.. to be penalized ?  

I'm not busting your balls here, I was asking legitimate question on if the agency I was reading about responsible for pushing this through was accurate.  I try to get the full picture on something before I comment, hence I did not comment, only questioned....  

I'm bored already though with this topic so never mind..... 

@kcblitzkrieg

 Here is the issue, as I stated these costs are for a purpose..most every line item on closing costs goes to either a service provided or some sort of fund for a specific reason. The decision to make this closing cost more affordable for the lower income borrower might have more to it than just Biden sucks and he is the cause for all my woes in life like many here think. It might be that the group who has the most cause for the cost and impact might be the higher cost property owner..I dont know because I have not researched it. But using the example of PMI, that for sure is weighted with the property cost and the premiums have to reflect that. if a borrower defaults on a 1.5M house that PMI has a big impact, the borrower who defaults on the 250k house much less so. I'd have to research what that specific fee covers and who is the user of that "pool" and why...but some here including you just play Biden pile on as if any cost was due to something that happened in the last two years and thus Biden is to blame.

Most closing cost increases are due to an imbalance in the cost, my point is that blanket partisan malarkey is pretty stupid and this for sure is the case here. Even if Biden hired all his relatives to run the agency there is little chance that the decision is partisan...most everything is NOT blanket partisan, that is the context of my reply.

@wallstreetcappers

  I think you missed the part about those with good credit getting penalized. How does that make any sense at all? WTF, does it go into a fund for banks/mortgage cos. to cover the cost of the inevitable defaults?

@BigGame90

  My CR is well over the magic 740 mark. I was gonna sell this fall & move to eastern WA but I'm gonna have to do some research now. 

If that boggles the mind, wait until you hear about how a certain president destroyed the most popular tax deduction to punish states that didn’t vote for him and subsidize states who did vote for him. I mean I and other members of the middle class work so hard, make all this money, then a certain partisan hack just takes it away out of spite! 
I’ll gladly pay a few more mortgage fees if the politicos do away with the unprecedented 2017 Biggest Tax Hike of a Lifetime. 

@THEMUGG

 PMI is for what you said, it goes to cover the cost when foreclosures happen. I am saying every single item of closing costs serves a purpose and the fact this is based on credit score is just another way of saying the obligation this serves might be more for the higher priced properties. There is more to the story than a Biden punishment of higher credit score people...if you were to dig to the core of this cost, what it covers, why it exists, which groups use it more I think you would come to a COMPLETELY different conclusion than this partisan stuff you went with here.

@wallstreetcappers

 Read the last two paragraphs of my original post. In what world does any of that make sense? When has it ever happened before? Why should anyone GAF about their credit anymore?

Yes indeed 

@wallstreetcappers

 If someone buying a 1.5 million dollar house (which will NOT be the people with lower credit scores), they most likely will NOT be paying PMI on that 1.5M purchase. If low income/ low credit score buyers are going to be able to "afford" a house with this plan, they most likely WILL be paying PMI (for those that don't know, PMI = private mortgage insurance. Which is applied to new mortgage loans that are above 80% LTV. LTV = loan to value). The PMI comes off when the house is less than 80% LTV. IF the housing market doesn't continue to increase in value, the new buyers will be paying PMI for A LONNNGGG TIME. PMI could be around 20% of the actual mortgage payment. If the housing market stabilizes at best, or goes down, PMI will not come off for a long time. THIS WILL CRUSH ALL NEW HOME BUYERS IN THE LONG RUN. These new buyers will NEED the housing market to increase so they can re-fi and get the PMI knocked off (assuming rates go lower). IF rates do not go lower (they probably won't for awhile or maybe inflation really IS transitory /s), there's no point in a Refi because higher rate payments will be the equivalent of PMI and you'd just reset your loan and pay closing fees. 

A sucker is born every day. 

I'm aware of what PMI is........the question at hand is why would those with good credit get penalized for it with a bigger "fee" & where is this extra money going? Directly subsidizing those with substandard/poor credit?

 I'm not completely ignorant to the mortgage biz. My ex was in it, & I've bought/sold a few houses in my day. That by no means makes me an expert, but I've never seen nor heard of buyers getting penalized for having good credit.........& I'm sorry, Wall, but the partisan aspect goes with the territory. If a bird shit on someones car when Trump was in office, it was Trump's fault.......hell, people are still blaming him for shit. Like it or not, you know the drill.

@BigGame90

 My PMI comment was to Mugg regarding its purpose...and for sure people pay PMI on houses of high cost, if you have a mortgage and are not at 20% down as you know you most likely will be paying it or pre-paying it etc.

The point was that every closing cost has a purpose, I dont buy the Biden sux its liberals running the housing agency that causes this bull crap, it just is absurd especially if you do not dig into the details on why and what...

Partisan anything when it comes to a large population is very often inaccurate and its a moronic way to think and analyze. 

@THEMUGG

 I guess if someone wants to bite the worm, they might get the hook. What's the saying? If something seems too good to be true...

What will the market do going forward?

I was just jumping in with the PMI and ideas behind it. I might be mistaken, but jumbo loans  (of high value like you speak of, maybe even less) would require around 20% down as to not require PMI. If someone is lending a jumbo with less than 20down, that PMI would be outrageous and the buyer is really banking on an increased market going forward and a favorable re-fi market.

I wouldn't go as far to say a crash is all Bidens fault. I would, put the weight of this new program on his shoulders as it may come into effect during his time. Only the future will decide if this was good or bad or neutral.

If everything were partisan, this would be general chat.

It is really not Biden's fault. Newsweek in 1987 said it well; Biden also failed to puncture another popular press preconception: that he is merely a lump of clay in the hands of Svengali-like consultants.

He cannot even remember he was in Ireland two weeks ago! Lump of clay fits. He doesn't know what's going on. He gets a laminated card, YOU SAY HELLO, YOU SIT DOWN, ETC.

He has cards, this will be the question and this will be the answer.

Snopes fact check reveals Biden isn't raising mortgage payments for people with good credit.  New pricing for mortgage companies are from Federal housing finance agency.  An independent regulatory agency.  Fee increases in some categories and decreases in others.  But generally fees increase as credit score decreases.  According to Urban institute, overlooked is that every borrower who pays under 20% down payment must buy mortgage insurance.  Higher credit borrowers aren't being charged more so that lower score borrowers pay less.  Many borrowers with high credit scores or large down payments will see their fees decrease. 

@thirdperson

 Learn to focus on the correct thing when you being a good BOT.  That is not the complaint about the new rule.

This is what you need to know when Biden is the one taking the blame on this and he is the one in charge when things bad happen; he takes credit for good, so must take blame for the bad.

"The Biden administration moved Mark Calabria, a Trump appointee and libertarian economist, out of the job. On Wednesday night, the White House appointed Sandra L. Thompson as the agency’s acting director."

She may be the nut that made the decision, but Biden put her in  the job. 

She was confirmed by the Senate in May of 2022.