by Matt Agorist, The Free Thought Project:
(FEE) — The Federal Housing Finance Agency (FHFA) has begun to implement new rules for mortgage borrowers. The result of these new rules is that, everything else held constant, some borrowers with relatively higher credit ratings who make larger down payments on houses will pay higher fees than they did before. Likewise, some borrowers with worse credit ratings who make smaller down payments will pay less.
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I’m being very careful with my words above for a reason. Put bluntly, pedantic fact-checkers are trying to lie about this policy. Consider the example below from Snopes:
- “Some people with higher credit scores will pay more in fees than those in similar situations under the old rule.”
- “Conversely, people with lower credit scores will pay less.”
- “And even those with higher credit scores will pay less once the new plan takes effect.”
These statements all occur one right after another in the Snopes “fact-check”.
Statement 2 is straightforward. People with worse credit will pay less. But look at statements 1 and 3. With this policy, some people with higher credit scores will pay more, but even those with higher credit scores will pay less. How can we make sense of this blatant contradiction?
The answer is that Snopes is saying that some people with higher credit scores will pay lower fees in certain situations under the new rules. But the fact that some people with higher scores will pay lower fees does not mean all people with higher scores will pay lower fees.
As Snopes points out, this policy does have winners and losers. Take their own example.
“Borrowers in the credit score range of 720-739 who plan to make a down payment of 20% on the home value would see a fee increase from 0.750% (under the old structure) to 1.250% (under the new plan effective starting May 1, 2023). So, a borrower in that credit score range making a down payment of $80,000 (20%) on a home value of $400,000 would now have to pay an upfront fee of $4,000 (1.25%) on the loan of $320,000 (80%). Under the old plan, that fee would have been $2,400 (0.75%).”
So the fee is higher than it used to be for a certain set of responsible borrowers putting 20% down! Snopes follows up by giving an example of how a different high credit score borrower in a different situation will have a lower payment. But the fact that some high credit borrowers will benefit doesn’t change the fact that the losers of the rule change tend to be those with high credit who make large down payments.
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