Armstrong Economics Blog/Real Estate Re-Posted Apr 26, 2023 by Martin Armstrong
Biden is ushering in new socialistic policies and there are no checks and balances. I mentioned a few weeks ago how Fannie Mae and Freddie Mac are changing Loan Level Price Adjustments (LLPAs) on conventional loans. To ensure “fairness,” the agencies are helping “underserved” home buyers by reducing costs for those with lower credit scores and less money for down payments. Borrowers with a credit score under 680 will be rewarded, while those who spent years maintaining a high level of creditworthiness will see higher rates. So those with good credit and savings will be subsidizing mortgages for others who are less financially responsible.
The Federal Housing Finance Agency (FHFA) is using the race card and claiming this will help people of color secure loans. “In the short term, this may increase homeownership among the targeted group, but I’m afraid it could decrease homeownership among the middle class,” said Jerry Howard, CEO of the National Association of Home Builders. “I’m not sure that we’re not robbing Peter to pay Paul here.” People of color can also have good credit and savings for a downpayment, and it is an insult to say otherwise. As of now, lenders are solely looking at the colorblind numbers and race is not a factor. This is merely a ploy to see how this administration can slowly replace our republic with socialism.
This is completely unconstitutional and it’s telling how this measure passed with little backlash. Do not trash your credit because the rules of this rigged game always change. There will be backlash once people see the additional fees that the Biden Administration calls “minimum.” An extra $40 per month on a $400K loan amounts to over $14,400 over the course of a 30-year mortgage. Moreover, already stressed banks will be forced to provide loans at a lower rate to people who should not qualify. The law goes into effect on May 1, right in time for the busy spring season. Biden is forcing people to redistribute their wealth, and we are not talking about real wealth. Those with real wealth are buying in cash right now. This directly hurts the middle class who believed that working hard could afford them the now imaginary American dream.