So my daughter and her new husband just got hit by this. They close later next month on their 1st home. Both have a good credit score but neither make more than 60k which I don't consider rich for their location. Their reward for keeping a good score? Pay more PMI to help fund those that suck at paying financial obligations WTH?!?! This is for everyone paying PMI on every FHA home purchase regardless of your wealth. https://www.foxbusiness.com/real-es...rule-punishing-homebuyers-good-credit-madness A new rule from the Biden administration will have good-credit home buyers paying more monthly to subsidize costs for high-risk buyers. The changes, which will begin in May, have many experts worried about the impacts both on buyers and the economy. Real estate expert and Madison Ventures+ managing director Mitch Roschelle unpacked the "madness" on "Varney & Co." on Thursday. "It's bizarro world," he said. "That fee that's charged, PMI, which is personal mortgage insurance, that fee that FHA [Federal Housing Administration] charges is intended to punish those with lower credit scores and riskier loans to basically level the playing field from a risk perspective. Well, what are we doing? We're doing the opposite." On "Mornings with Maria" earlier, Strategic Wealth Partners CEO Mark Tepper also slammed the measure arguing that it is "socialism for homeowners." "We mentioned the student loan issue. Cab drivers who never went to college are subsidizing that student loan debt, and in this situation, this Biden administration more and more often, they are making decisions to reward bad decisions," the financial expert said. Experts believe that borrowers with a credit score of about 680 would pay around $40 more per month on a $400,000 mortgage under rules from the Federal Housing Finance Agency that go into effect May 1 — costs that will help subsidize people with lower credit ratings also looking for a mortgage, according to a Washington Times report Tuesday. "If you have a high credit score, and 680 is a good credit score, you have to pay more. And we're talking about real money. This could be $100 a month more, depending on the size of your loan. So it makes no sense," Roschelle said. "And by the way, this isn't about first-time homebuyers. There's nothing in this rule that says it applies to first-time homebuyers. It applies to anybody borrowing money that's insured by FHA. It's madness." The Federal Housing Finance Agency (FHFA), which oversees federally backed home mortgage companies Fannie Mae and Freddie Mac, has long sought to give consumers more affordable housing options. Under the new rules, consumers with lower credit ratings and less money for a down payment would qualify for better mortgage rates than they otherwise would have. "That's not the way you grow as a country, as an economy, by essentially saying, 'Hey, if you spent recklessly, you lived above your means and you stopped making your payments on time, have no fear. Someone who's done it the right way is going to pay for you.' That's not what capitalism is all about, and it puts us in a situation where there's no consequences when you make bad decisions," Tepper added. FHFA Director Sandra Thompson said the new rules are designed to "increase pricing support for purchase borrowers limited by income or by wealth" and come with "minimal" fee changes. While Biden's rule change will add another headache for homebuyers, Roschelle conceded complying with the rules, regulations and various documentation when applying for a mortgage is already "brutal." "They say it's a financial colonoscopy and it's brutal," Roschelle said. "And guess what, if you're borrowing from your local community bank that's under tremendous pressure, it's even harder." Beyond frustration with the rule, experts are concerned this will further exacerbate the difficult housing market. Roschelle explained the real estate market is slumping and Biden's rule is "going to slow it more." "We're down from selling 6 million houses on an annualized basis to 4.4 (million). So realtors are finding it really hard to make a living. But, you know, the supply of homes is still alarmingly low. And on the price side, homes are $100,000 more expensive today than they were in February of 2020. So we still have that affordability problem," he said. Tepper also said the "real estate market [is] basically at a standstill because sellers… don't want to lower their price because they know what their neighbor sold for nine months ago." "Buyers don't have the buying power they used to have. So transactions aren't happening. You throw in the fact that existing home inventory is at an all-time low, and then we looked at recent data for building permits and housing starts. There aren't building new homes, either," he continued.
I’d like to see a non-Fox News examination on this rule. Even if there are nuggets of truth in there, when I see Fox on anything I dismiss it as balderdash and poppycock.
not quite as much outrage as fox wants you to be in. fox can get f*cked. https://www.mortgagenewsdaily.com/markets/mortgage-rates-04212023
Here is another article about the rules: Lower FHA mortgage insurance premiums set to take effect in March (nbcnews.com) My guess, trying to read between the lines, is that FHA is changing their pricing mechanism to be a bit more egalitarian so that incrementally more lower income households can afford to buy a home. The effect of the change would lower the price but apply to more people, including more people with good credit. For those people, costs go up because they would be required to buy mortgage insurance when before they were not. For other people who didn't meet credit score thresholds and would have been required to buy mortgage insurance regardless, they'd pay a little less. If this was a competitive market, prices would end up getting priced according to the actual risk profiles. But this is a government function, so it is essentially a government tool to achieve policy goals. People paying less because they have good credit isn't the "right way" and neither is the more egalitarian approach. You would need a robust and efficient competitive market to determine the "right" price, but that doesn't exist. There is just a government that sometimes wants to reinforce legacy wealth by discriminating by credit score, and sometimes wants to spread the wealth with egalitarian credit policies. We're currently swinging to the latter. Next time a Republican is elected president, maybe it swings back the other way.
Here is a good article from an unbiased source: https://amp.mortgagenewsdaily.com/article/6442fab12e2659cfc16b402f
Here is the chart from VooDoo's article: Still better to have good credit and lower LTV - saying the new system is bad presumes the old system was the "right" way to measure risk. Not sure why +95% LTV is less than 80% LTV though.
You know I searched CNN and found nothing because I knew it would be looked down upon. Do your own research. It’s true. Or just follow what you want. I’m not here to convert because I don’t like any 1 source - just pointing out BS.
I also looked and didn't find much. It's cool. @DOMINATOR and @VooDooPope found a great article for us. One of the great things about this bbs.
Hilariously - this nonsense was the subject of the last ever Tucker Carlson show Believing that the housing shortage is a function of good , deserving (ahem) homebuyers getting, shucked and jived, so to speak, by lesser ones - is about the most Fox News thing ever Good riddance to Tucker and to anyone who believes this trash
Reminds me of how the Crash of 08 was retroactively blamed in Fox news land, not on over leveraged underegulated trading that actually was the proximate cause but... a bunch of black people buying houses
That is strange. It would be better to put not much down and lock in that lower PMI then pay principal after securing the loan. I feel terrible for anyone locking in 7+% interest rates right now.
Yeah, good reason to wait. Anyone who is in a decent situation shouldn’t be looking to ‘upgrade’ right now. Just say no to your wives, fellas. I don’t think we’ll ever see rates below 4% any time soon, though.
Can someone give me a TLDR on this? Legitimate problem or typical half-truth ragebait from our angertainment ecosystem? Thanks in advance.
while the title is factual the details make it irrelevant for most and the changes made are very small. this only applies to FHA loans. its straight rage bait
There was a short window between January and February where interest rates were hovering around 5.5%. I was able to get 5.46% which is why I jumped on the deal I had, plus price had been brought down by builder, so it was just a perfect storm. Right now, I would stay the hell away. I usually wouldn't jump at 5.46% but honestly, don't have time for rates to fall any lower, and who knows if they will anytime soon.
