Nevada Controller voices opposition to new Biden mortgage policy
CARSON CITY, Nev. (KOLO) - Nevada Controller Andy Matthews is voicing his opposition to President Biden’s new mortgage policy.
He joins a 34-state coalition of other State Financial Officers in signing a letter penned to Biden criticizing a new Federal Housing Finance Agency policy they say will make it more expensive for people with good credit to buy a home.
New rules from the FHFA took effect May 1, and will mean that borrowers with lower credit scores and less money down will qualify for better mortgage rates than those in the opposite situation.
“This new policy unjustly punishes those who have acted responsibly, sacrificed and worked hard toward a secure financial future for themselves and their families,” Matthews said. “It is outrageous and insulting that the Biden administration would adopt a policy that perversely removes Americans’ incentives to manage their finances wisely and prudently. I’m honored to stand with my colleagues from around the country against this terrible new policy.”
The full letter reads as follows:
“We write today expressing our deep concern with the new Federal Housing Finance Agency policy which goes into effect today and will have the net effect of making it significantly more expensive for people with good credit to buy houses. This new policy will force homebuyers with good credit to pay more on their mortgage every single month.
In other words, the 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. 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. For decades, Americans have been told that they will be rewarded for saving their money and building a good credit score. This policy turns that time-tested principle upside down.
And how will these new junk fees be used? To subsidize higher-risk borrowers by handing out better mortgage rates to people with lower credit ratings who have saved less for a down payment. We all want to increase home ownership across our great country – that’s a central component of the American Dream. And we recognize that there’s a gap in access to credit and that low credit scores are a significant barrier to buying a home. Moreover, federal programs exist to address affordable housing assistance and the new policy does nothing to address the shortage of housing inventory.
But the 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.
It is already clear that 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. And – at a time when the real estate market has already slowed considerably due to high interest rates – it will further depress home sales. The practice by FHFA of making substantive policy changes without utilizing the federal rulemaking process is inappropriate.
We urge you to take immediate action to end this unconscionable policy.”
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