Posted BY: Joe Fried
Perhaps you have already heard about the latest welfare gimmick from team Biden: the great shift in loan costs from high-risk borrowers to low-risk borrowers. Effective May 1, 2023, the Federal Housing Finance Agency (FHFA) approved a new schedule of upfront fees to be charged by two of its regulated entities, Fannie Mae and Freddie Mac.
In the table below, which pertains to home mortgage loans, the “X” axis shows the size of the down payment, with the amount getting smaller as we move from left to right. The “Y” axis shows the borrower’s credit score, with the top representing high credit scores and the bottom representing low scores.
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Everyone fitting into the column to the very far right is a relatively high-risk borrower because of the extremely small down payment. And that is even true for people with good credit scores. It is important to remember that almost anyone who has lots of credit cards and pays them down on time, will have a good credit score — even if his or her savings are practically nonexistent.
People with low credit scores, such as those in the bottom four rows of the table, are also relatively high-risk borrowers.
In the Biden Inverse Universe, the high-risk borrowers get the fee reductions (shown in green), and the people with good credit and reasonably large down payments have to pay more (shown in red).
