As the Biden administration’s mortgage redistribution plan goes into effect, real estate industry leaders have signaled it’s “one more boot on our neck” in the housing market.
“I think that putting people in a position to take a place that they really can’t make happen is a recipe for disaster,” Manhattan broker Brian Lewis, a.k.a. “America’s Agent,” said on “Mornings with Maria” Monday.
Under new rules from the Federal Housing Finance Agency (FHFA) set to take effect May 1, borrowers with lower credit ratings and less money for a down payment will qualify for better mortgage rates than they otherwise would have, while those with higher ratings will pay increased fees.
A person’s credit score is one of the most important indicators of creditworthiness for lenders, helping to determine if a prospective borrower will qualify for a loan and what interest rate will apply.
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According to a recent analysis from Bankrate, someone with a “below average” credit score of 640 seeking a $350,000 mortgage with 20% down paid $10,500 in fees before the new regulations. They will now pay $7,875.
Someone with a 740 credit score exploring the same deal paid $1,750 in fees before the FHFA’s new rules, but now is expected to pay more at $3,062.
“Does my industry need one more boot on our neck to hold us down? Interest rates have gone up, we’re just getting our stride, and now this,” Lewis said.
Other real estate agents and economists have warned the Biden policy will disproportionately impact “responsible” homeowners.
“It’s an idea of fairness. It’s really the responsible people who have done the right thing, who have kept their credit in check, they’re being hit with yet another fee,” Nest Seekers chief economist Erin Sykes told FOX Business’ Jeff Flock.
“We’re all seeing the home sales data and seeing how much home sales are declining because of these rising interest rates,” Former Obama Federal Housing Administration Commissioner David Stevens previously said on “America Reports.” “And now we’re adding this second whammy to good credit, worthy home buyers who are now going to have to pay for other people’s mortgages.”
Lewis agreed with the assertion that the new rules are not fair to American homeowners and potential buyers.
“I do think that some of these people who will benefit from this program are not necessarily people who will not pay their loans back. But nobody paid for my ticket. I worked for it, and I worked my way up. And I think that’s the way to do it,” America’s Agent explained. “And I don’t think it’s to penalize the people who are already facing higher interest rates.”
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Senators Eric Schmitt, R-Mo., Roger Marshall, R-Kan., and Thom Tillis, R-N.C., have penned a letter to Biden’s FHFA director expressing outrage over the regulation, claiming it penalized fiscally responsible Americans.
“Perhaps the institutions themselves, the banks themselves can create incentives. That could be a nice business flow for a bank to have this be their jam, to be the thing they focus on,” Lewis proposed. “But to add it to the American consumer who is already saddled – insult to injury, punch in the gut.”
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Fox News’ Michael Lee contributed to this report.