The war on those with good credit

(AP Photo/David Zalubowski, File)

Here’s a story that hasn’t drawn nearly enough attention yet. A new change being driven by the Biden administration’s Federal Housing Authority will cause new fees and increased interest rates for home mortgages. Starting on May 1st, Fannie Mae and Freddie Mac will offer discounted mortgage rates to prospective home buyers with “riskier credit backgrounds” (meaning people with poor credit ratings) to enable them to qualify for a mortgage. But that will generate more losses in the system and that money will have to be made up somehow. So people holding lower-cost mortgages because they have a good credit rating will be charged more, leading to their monthly mortgage payments going up. I suppose this is the latest front in the battle for “equity.” (NY Post)

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A little-noticed revamp of federal rules on mortgage fees will offer discounted rates for home buyers with riskier credit backgrounds — and force higher-credit homebuyers to foot the bill, The Post has learned.

Fannie Mae and Freddie Mac will enact changes to fees known as loan-level price adjustments (LLPAs) on May 1 that will affect mortgages originating at private banks nationwide, from Wells Fargo to JPMorgan Chase, effectively tweaking interest rates paid by the vast majority of homebuyers.

What is it that we were always told? You have to be a responsible borrower and maintain a good credit rating so the banks will be able to “trust you” when you need to apply for a mortgage or take out some other type of loan. Those with poor credit ratings were either charged ludicrously high interest rates or turned down entirely when applying for a loan. It was always a somewhat dysfunctional system, but it somehow managed to work for all these years.

But now, your credit history apparently doesn’t matter. Or at least it doesn’t matter for those with poor credit ratings. It definitely matters for those who paid their bills on time because their mortgage payments are about to go up. So we once again see the Biden administration punishing those who played by the rules and imposing yet another tax on working-class people who purchased a home instead of renting.

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Of course, this episode may provide a reminder that the entire credit scoring system in this country is a scam made up to benefit the banking industry and their faithful servants in the Washington swamp. You might imagine that if you worked diligently, saved your money, and paid all of your bills on time that you would have a very respectable credit score. But if you handled your financial affairs that way and made almost all of your purchases and payments in cash rather than asking for credit, you would be wrong. You would have a terrible credit rating.

The only way to drive up your credit score is by running up credit card bills or making payments on other sorts of loans. Your credit score isn’t a measure of how responsible you’ve been. It’s an indicator of how much interest you’ve been willing to pay, driving the profits of banks and financial institutions. They are very good at marking people down when they fail to make their loan payments on time, but they offer no recognition whatsoever for responsible personal financial management that doesn’t involve going into debt.

As long as the current diversity regime is in charge, there apparently isn’t much of an incentive for responsible fiscal management. (Are we surprised? Look what they’ve done to the national debt in only two years.) So if you’re thinking of buying your first home, maybe you should start skipping some of your credit card payments or other obligations. If nothing else, you might get a cheaper mortgage.

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David Strom 8:00 AM | July 25, 2024
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