A federal policy that attaches a fee to the mortgage payment of homeowners with higher credit scores for the benefit of those who have lower credit scores is setting up the country for a housing crisis, according to the leader of a conservative, Missouri-first 501(c)4 organization.
“People with good credit shouldn't be penalized for those with poor credit,” said Byron Keelin, president of the Freedom Principle MO. “The housing crash of 2008 was caused as a result of the government doing ESG scoring before it was called ESG and so is giving people loans that can’t pay them back. Then the banks profit off them, resulting in a massive bailout.”
Keelin was reacting to the news last week that the state of Missouri joined 26 states opposing the policy which became effective on May 1.
“To me, this is another one of these schemes that need to be stopped,” Keelin told the St. Louis Record.
State of Pennsylvania Treasurer Stacy Garrity is leading the coalition of treasurers and other finance officers in sending a letter to U.S. Pres. Joe Biden and Sandra Thompson, director of the Federal Housing Finance Agency, according to media reports.
"It is already clear that this new policy will be a disaster," the letter states. "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."
However, Sandra Thompson, director of the Federal Housing Finance Agency, has said higher-credit-score borrowers are not being charged more so that lower-credit-score borrowers can pay less.
“The updated fees, as was true of the prior fees, generally increase as credit scores decrease for any given level of down payment,” Thompson said in a statement online. “Some updated fees are higher, and some are lower, in differing amounts. They do not represent pure decreases for high-risk borrowers or pure increases for low-risk borrowers. Many borrowers with high credit scores or large down payments will see their fees decrease or remain flat.”
Other states that signed the letter include Alabama, Alaska, Arizona, Arkansas, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Utah, West Virginia, Wisconsin, and Wyoming.
“What this is doing is setting up another housing crisis that created the 2008 recession and collapse,” Keelin added.
Fox News reported that people with a credit score of 680 or higher can expect to pay an additional $40 on a $400,000 mortgage. The money raised from the fee will reportedly be used to help people with lower credit ratings buy a home.
Garrity's letter further stated, "[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."