Quote Originally Posted by wallstreetcappers:
@THEMUGG If you read the article it says that the change is for originations from Fannie and Freddie, if you originated at say Loan Depot then you paid their origination fee even if the loan is taken by Fannie, the fee is at closing not at transfer. Also, if you did read the article then it states that the fee structure has been shifted from the lower credit score to higher credit score, but even with the shift the lower score has a MUCH higher rate on this fee...its right there in the article. It also stated that this change was to bolster the balance sheet for Fannie and Freddie, to improve their balance sheet. Who needs details and truth though, blanket blaming Biden and Libs is much more fun.
Not sure which article you are referring to. The one he quoted states this as the reasons:
Director Sandra Thompson, a Biden appointee, said the fee changes will “increase pricing support for purchase borrowers limited by income or by wealth.” The agency calls the overall fee changes “minimal” and said the moves will ensure market stability.
“Why was this done? The answer is simple, it was to try to narrow the gap in access to credit especially for minority home buyers who often have lower down payments and lower credit scores,” he wrote in a post on LinkedIn. “The gap in homeownership opportunity is real. America is facing a severe shortage of affordable homes for sales combined with excessive demand causing an imbalance. But convoluting pricing and credit is not the way to solve this problem.”
The only reference to balance sheet is this:
He predicted that the Federal Reserve will soon complete its course of tightening its balance sheet and mortgage rates will fall.
This of course is referring to the Fed and the interest rates. Not the balance sheets of Fannie Mae and Freddie Mac.
Then his concerns are talked about:
“Demand for homes will begin to rise and the same challenges for first-time homebuyers will return,” he said.
Lenders also are worried about the impact of the debt-to-income fee that takes effect in August because homebuyers might feel as if they are in a game of “bait and switch” on their projected borrowing costs.
In a letter to Ms. Thompson in February, Mortgage Bankers Association President Bob Broeksmit said the timing of the fee changes was “especially troubling” and that the debt-to-income ratio fee creates “operational issues and quality control” for lenders.
Among the many issues with this, is that it is good intentions that are not well thought out. The theory is that it makes it a level-playing field and will get more folks into houses that otherwise would not get into houses.
But the issue is the same old story. Folks will be getting houses when they should not be getting houses because they are not financially ready or cannot afford to.
Another issue is folks will now be allowed to get into more of a house than they should be allowed to. The studies show what people should be able to afford with their debt-to-income ratio and credit score.
So, the guy int the article is correct in a sense when he says it is a subsidizing by some for others.
If you cannot afford a house you should work to do so. You should also not buy too much house. Live within your means, etc.
It is good intentions gone wrong, again.
What happens later on down the road to these folks when they cannot afford to keep the house? I could easily see something along the lines of what they want do with student loan forgiveness, for nearly the same reasons. Good intentions gone bad.
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