May 21, 2024

27 States Slam Biden’s Disastrous Mortgage Policy, Demand Immediate Reversal

President Joe Biden delivers remarks on lowering healthcare costs, Tuesday, September 27, 2022, in the Rose Garden of the White House. (Official White House Photo by Adam Schultz)

Top finance officials from 27 states, including state treasurers, auditors, and commissioners of revenue, have called on President Biden to abandon his contentious policy that requires individuals with good credit scores to subsidize mortgage loans for higher-risk borrowers. They argue that the policy, set to take effect today, would be disastrous.

The officials represent Alabama, Alaska, Arizona, Arkansas, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Utah, West Virginia, Wisconsin, and Wyoming.

The Federal Housing Agency (FHFA) introduced the plan a few weeks ago with the goal of helping lower-income borrowers afford their monthly mortgage payments. The policy would require people with good credit scores to pay more for their mortgages each month, with the extra payments supporting the loans of higher-risk borrowers.

Both Republicans and Democrats have criticized the controversial policy, including President Obama’s former Federal Housing Administrator. On Monday, financial officers from 27 states argued that the policy is a mistake even before its implementation.

In a letter led by Pennsylvania Treasurer Stacy Garrity and addressed to Biden and FHFA Director Sandra Thompson, they wrote, “This new policy will be a disaster. It amounts to a middle-class tax hike that will unfairly cost American families millions upon millions of dollars. Additionally, it will further depress home sales during a time when the real estate market has already slowed considerably due to high interest rates.”

The state finance officers criticized the policy for undermining the traditional system of home buying incentives and disadvantaging those who make responsible financial decisions.

The letter stated, “The policy will take money away from those who played by the rules and made sound decisions – including millions of hardworking, middle-class Americans who established a good credit score and saved enough to make a substantial down payment. Incredibly, those who make down payments of 20 percent or more on their homes will face the highest fees – one of the most counterintuitive incentives conceivable.”

They noted that the mandatory extra payments would be used to offer better mortgage rates to people with lower credit ratings, potentially making it easier for individuals with unstable credit histories to afford more expensive mortgages and putting more people at financial risk.

The state officials acknowledged that expanding homeownership is a commendable goal, but they believe that the forced subsidization of risky loans is not the solution. Instead, they suggest implementing policies to reduce inflation, cut energy costs, and lower interest rates.

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Sally Williams
Sally Williams
1 year ago

Is it April Fool’s Day!