CHICAGO (NewsNation) — As part of the Federal Housing Finance Agency’s push for affordable housing, homebuyers with good credit will soon have to pay higher mortgage rates and fees to subsidize people with riskier credit ratings, according to a report by The Washington Times.
A new federal rule enforced by the Biden administration will make it so that people looking to buy a home with a credit score of 680 or higher will have to pay about $40 per month more than people with worse credit when taking out a home loan of $400,000, the report said.
The new rule, which goes into effect on May 1, will affect mortgages from private banks across the nation. According to The Washington Times, Fannie Mae and Freddie Mac, federally-backed home mortgage companies, will establish the loan-level price adjustments (LLPAs).
Mortgage industry professionals told The New York Post that the new rule was an “ugly surprise” for homebuyers who “worked for years to build their credit.”
One mortgage loan originator told The New York Post that it’s going to be a hard conversation to have, saying, “It’s going to be a challenge trying to explain to somebody that says, ‘I worked my whole life for high credit and I’ve put a lot of money down and you’re telling me that’s a negative now?’”
David Stevens, the Federal Housing Administration commissioner for the Obama administration, told The New York Post that the rule is unprecedented.