Global Courant 2023-04-26 14:00:36
Senate Republicans on Wednesday accused the Biden administration’s Federal Housing Finance Agency (FHFA) of playing politics with the US housing market by forcing people with good credit to subsidize high-risk mortgages, warning that doing so would put individual homebuyers and the entire market at risk. to take. Danger.
Senator Roger Marshall, R-Kan., and a dozen other GOP senators issued this warning in a letter to FHFA Director Sandra Thompson, who also demanded details of how this policy decision came about, a possible sign that the legality of the relocation could be challenged.
“This announcement, which is expected to go into effect May 1, 2023, will reverse the commonsense risk finance structure at the GSEs in an effort to lower mortgage rates for riskier individuals with low credit scores and forcibly raise rates for those with higher scores. .” they wrote, referring to government-sponsored entities and mortgage giants Fannie Mae and Freddie Mac. “This short-sighted and counterproductive policy demonstrates a deep misunderstanding of the need to accurately match home finance products to credit risk and creates a perverse incentive that penalizes hard-working Americans for their fiscal prudence.”
BIDEN RULE WILL REdistribute HIGH-RISK LOAN COSTS TO HOMEOWNERS WITH GOOD CREDIT
President Biden’s administration will soon introduce a rule aimed at letting people with good credit subsidize the mortgage payments of high-risk borrowers. Photographer: Chris Kleponis/CNP/Bloomberg via Getty Images
“The housing market should not be exploited as a means of pandering to targeted demographics that you have chosen, nor as a tool to engender political favoritism,” they added.
Experts have said that people with credit scores close to 680 can pay another $40 more per month on a $400,000 rule to subsidize higher-risk mortgages. Marshall told Fox News Digital that there’s no point in beating harder on people who have been responsible.
“Just when you thought Joe Biden couldn’t get more in touch with the hardships Americans face because of his failed economic agenda, skyrocketing interest rates and record high Biden inflation, he doubled down and now punished responsible Americans with good credit scores. Marshall said. “This is illogical. The Biden administration must answer for why they penalize Americans who diligently met their financial obligations and earned higher credit scores.”
It’s a policy change that has also drawn criticism from Democrats. President Obama’s former Commissioner of the Federal Housing Administration, David Stevens, told Fox News“We can make better programs to help more minorities own homes. This is not the way to do it.”
US REAL ESTATE MARKET IN ‘MAJOR PROBLEMS’, EXPERT WARNS
Sen. Roger Marshall, R-Kan., and other GOP senators warn that Biden’s plan could create confusion and turmoil in the housing market. Photographer: Al Drago/Bloomberg via Getty Images
The Senate Republicans’ letter says that FHFA has previously tried to “socialize the U.S. housing market” by adjusting the rules for GSEs to follow. They cautioned that this latest effort appears to be aimed at making high-risk borrowers more comfortable with homes that are out of their price range.
“The Equitable Housing Finance Plans developed by the GSEs led by FHFA attempted to create a class of housing grants based on one’s skin color, despite the clear unconstitutionality of this concept,” they wrote. “Now FHFA seems intent on going further and introducing a system that willfully ignores the realities of credit in an effort to push Americans into homes they may not be able to afford.”
US REAL ESTATE HAS ‘MONUMENTAL OPPORTUNITY’ TO RESOLVE HOUSING CRISIS IN 2023: EXPERT
Biden’s new mortgage plan goes into effect May 1. (Photo by Anna Moneymaker/Getty Images) (Anna Moneymaker/Getty Images)
Senators added that the rule “brutally contradicts” current financial principles that say individual financial responsibility should be rewarded and the cost of financial products should be tailored to each person as much as possible.
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The senators asked the FHFA director whether a cost-benefit analysis has been done on how the rule change could affect the housing market, and whether a formal notice and comment period has been held on the rule to allow for public input. That’s a sign that Republicans could challenge the rule — the Administrative Procedures Act requires a period of public comment before the rules become final.
Pete Kasperowicz is a political editor at Fox News Digital.
