GOP Leaders Demand Biden Administration Stop Plans To Punish Good-Credit Homebuyers

Get ready for a political showdown! Two House Republican leaders are taking aim at the Biden administration’s plans to make homebuyers with good credit pay more for mortgage costs. They’re demanding that Federal Housing Finance Agency Director Sandra Thompson eliminate the proposal or face legislative action. The Republicans argue that the plan unfairly punishes responsible borrowers and rewards those with riskier credit.

The proposal in question was announced by the Federal Housing Finance Agency in January and includes redesigned and recalibrated upfront fee matrices for purchase, rate-term refinance, and cash-out refinance loans. The new pricing grids are set to take effect in August 2023 and will include an upfront fee for certain borrowers with a debt-to-income ratio above 40%.

Financial Services Chair Rep. Patrick McHenry and Housing and Insurance subcommittee chair Warren Davidson are leading the charge against the proposal, calling it a tax on creditworthy homebuyers. They argue that the changes violate the principle of risk-based pricing and will result in higher mortgage rates and reduced access to credit.

Under the proposal, homebuyers with credit scores above 680 would pay an additional $40 each month on a home loan of $400,000, while those making down payments between 15% and 20% will receive the largest fees. It remains to be seen whether the Republicans will be successful in their efforts to repeal the proposal, but one thing is for sure: this is a fight worth watching!