Saturday, June 10, 2023


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News Article
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Without Their Knowing It

            Remember when you were growing up and your relatives and friends preached to you about paying your bills on time and getting and maintaining a good credit score?

            How about rushing to get your first credit card so you could begin to establish a good credit rating in hopes of having positive references so you could obtain future, perhaps larger loans like a mortgage?

             As of May 1, the above won't carry as much weight as it used to.  That's the day when mortgage payment distribution comes to homebuyers.  It is a new rule that will raise mortgage fees for borrowers with good credit to subsidize higher-risk borrowers.

            The current structure of the Loan-Level Price Adjustment (LLPA) matrix will be upended by the Federal Housing Finance Agency (FHFA) in the hope of addressing housing affordability challenges in the United States.

            According to a report in the "Wall Street Journal", under the rule, which goes into effect on Monday, home buyers with a good credit score over 680 will pay about $40 more each month on a $400,000 loan, and upward depending on the size of the loan. Those who make down payments of 20% on their homes will pay the highest fees. Those payments will then be used to subsidize higher-risk borrowers through lower fees.

            It actually penalizes homebuyers with a good credit score.

            "Newsweek" reports that the effort to get more low-income Americans and Americans of color into homeownership is essentially being subsidized by borrowers who have better credit scores and can contribute more to their down payment.  But, it comes at the cost of negatively affecting buyers who worked hard to save enough money for a larger down payment and maintain a strong credit rating.

            Maybe our federal administration has run out of money to help folks who need aid in getting mortgages and now are graciously offering your money instead.  You pay for aid and they get the credit.

            Remember the housing crash of 2008 when mortgage companies were pressured to issue far more subprime mortgages to help the housing market?  How did that work out?

            When you buy a house, federal regulations require that all charges and credits to buyers and sellers be listed in the mortgage settlement statement.  Perhaps the government will add a new line to include this "surtax". 

            Then, at least new homebuyers with a good credit rating might be able to claim it on their income tax filing.

            The bottomless pit of spending seems to be just that.  There is no end in sight.  If we can't find it in the budget, and you don't want to raise taxes or cut spending, just find another way to get taxpayers to fund the project.

            Preferably, without their knowing it.

            Then flaunt it as your accomplishment.






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