(NewsNation) — Financial officers in 27 states are calling on President Joe Biden to rescind a mortgage policy that goes into effect Monday.
The new policy would require borrowers with a credit score of 680 or higher to pay around $40 more a month on mortgages up to $400,000. That money would help subsidize buyers with lower credit scores.
“In other words, the policy will take money away from the people who played by the rules
and did things right — including millions of hardworking, middle-class Americans who built a
good credit score and saved enough to make a strong down payment. Incredibly, those who make
down payments of 20% or more on their homes will pay the highest fees — one of the most
backward incentives imaginable,” the letter reads.
The letter acknowledged credit scores can be a significant barrier to home ownership, but said federal programs already exist to help, and this new program fails to address a shortage of housing stock.
The rule only applies to federal loans backed by Freddie Mac and Fanny Mae, which are mainly conventional loans. Those getting mortgages through other programs, like first-time home buyer or VA loans, are not impacted.
“It’s the origination charges, not the interest rate,” real estate Justin Mason told NewsNation.
Home prices have been an obstacle for millennials, who became homeowners later than previous generations. Three-quarters of millennials live paycheck-to-paycheck, making it difficult to save money for a down payment.
