Category Fannie Mae and Freddie Mac

May 3 2023

Republicans Fighting Biden’s Mortgage Madness


Armstrong Economics Blog/Real Estate Re-Posted May 3, 2023 by Martin Armstrong

Republicans at the state level are demanding that Biden and the FHFA repeal the asinine new law that punishes Americans with high credit scores by forcing them to subsidize the mortgages of those with low credit scores. The Biden Administration has been attempting to control real estate for some time. In June 2021, Biden forced the Supreme Court to give him the power to fire Mark Calabria as the regulator of Freddie Mac and Fannie Mae. Biden’s team said they were “moving forward today to replace the current director with an appointee who reflects the administration’s values.” This was also when shareholders sued the government for the 2012 decision to pay all proceeds directly to the Treasury.

Trump was in favor of Calabria and fought to separate Freddie and Fannie from the government, but the Democrats repealed everything once Joe took over. Florida Chief Financial Officer Jimmy Patronis and 33 other Republicans at the state level are urging Biden and the FHFA to repeal this “hair-brained” policy. “This new 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,” the group noted. “Incredibly, those who make down payments of 20 percent or more on their homes will pay the highest fees – one of the most backward incentives imaginable.”

Patronis and others argued that owning a home was once the American dream, and the new law will hurt middle-class families who worked and budgeted for their downpayment and credit score. “[T]he right way to solve that problem is not to use the power of the federal government to penalize hardworking, middle-class American families by confiscating their money and using it as a handout. The right way is to implement policies which will reduce inflation, cut energy costs and bring lower interest rates. Doing so will enable more families to save and improve their credit scores. Increased financial literacy efforts must also be part of the solution,” the letter also states. Lowering energy scores and inflation is not part of the Build Back Better agenda.

Providing people with loans who otherwise would not qualify is part of the plan for the Great Reset. Raising taxes on everything imaginable is also part of the agenda. The government wants to tax the middle class out of homeownership, force the working class to default on their mortgages, and move everyone into government-provided smart cities. The hatred toward government is brewing and will soon bubble over.

Apr 19 2023

New Home Buyers Penalized for High Credit Scores


Armstrong Economics Blog/Real Estate Re-Posted Apr 19, 2023 by Martin Armstrong

Fannie Mae and Freddie Mac are making some changes to Loan Level Price Adjustments (LLPAs) that will likely hurt those with good credit applying for conventional loans in the US. To ensure “fairness,” the agencies are helping “underserved” first-time 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.

Spent years saving for a down payment? Expect to pay more as they implement fees for borrowers who can put 15% to 20%+ down. Previously, lenders would favor higher down payments in their risk adjustments. So even if someone chose to put down over 20% to avoid PMI costs, they would now be penalized due to these asinine FHFA rules. So those with good pay, credit, and savings will be penalized while low-income earners will receive countless benefits.

In a blog post the other day, I mentioned how banks are not profiting on mortgages as they once did. Fannie and Freddie are looking to track down extra fees as the middle class is continually squeezed. They want the people to pay for mortgage insurance. Perhaps lenders want those with lower credit scores, who are less likely to meet their obligations as a first-time home buyer, to take out loans since they’re more likely to default. This is like giving A test scores to students who only studied enough to earn a C. They are making it difficult for financially responsible people to enter the housing market.