According to the Washington Times, a new Biden administration regulation would make homeowners with strong credit scores pay greater mortgage rates as a means to subsidize loans to borrowers with worse borrowing histories.
Homebuyers with credit scores of 680 or above will be subject to the tax, which will apply to individuals who purchase or refinance homes after May 1. The price will be around $40 per month on a $400,000 mortgage, or close to $500 per year. The greatest fees will be assessed to homebuyers with down payments between 15% and 20%.
Industry insiders claim that the modifications would aggravate refinancing aspirants and homebuyers with excellent credit scores because they are penalized for having sound financial standings.
“The modifications are illogical.” The Washington Times received an email from Ian Wright, a senior loan officer with Bay Equity Home Loans in the San Francisco Bay Area, who stated that “penalizing applicants with higher down payments and credit scores would not be popular. It makes things more difficult for customers during a procedure that might already feel complicated due to the volume of documentation, technical terms, etc. The borrower should never be confused for any reason.”
The law, according to Wright, would “cause customer-service difficulties for lenders as well as individual loan agents when the customer is unable to comprehend the reason why their interest rate and charges suddenly increased.”
“I support first-time buyers having the opportunity to enter the market, but it’s obvious that these decisions are not being made by people who are familiar with the complete mortgage process,” the speaker stated.
“The additional fees will generate significant uncertainty as we enter the regular spring home buying season,” said David Stevens, a former president of the Mortgage Bankers Association who worked as commissioner of the Federal Housing Agency under the Obama administration. “The fee placed on people with strong scores allows others with poorer credit scores and smaller down payments to qualify for improved mortgage rates and reduced costs under the new Biden regulations.”
The NAR president, Kenny Parcell, testified before the Federal Housing Finance Agency earlier this year and stated, “Now is not the time to raise fees on homebuyers in the wake of a 3-percentage-point increase in mortgage rates.”