WASHINGTON – Today, Senator Eric Schmitt joined Senator Roger Marshall of Kansas and Senator Thom Tillis of North Carolina in penning a letter to Biden’s Federal Housing Finance Agency (FHFA) Director Sandra Thompson expressing outrage over a new rule that penalizes fiscally responsible Americans to subsidize high risk borrowers who have low credit scores:
“This backwards mortgage policy is fundamentally unfair, does not make sense for lenders, and is thinly veiled socialism – plain and simple. I’m proud to stand with Senator Marshall and Senator Tillis in defense of the American dream for hardworking Missourians,” said Senator Eric Schmitt.
Background:
- These changes penalize borrowers for doing the right thing. Saving up to put more money into a down payment, or increasing one’s credit score by responsibly paying back debts will now result in higher prices.
- By moving away from risk-based pricing on specific loan characteristics to cross subsidize borrowers who are more likely to default, the taxpayer will end up shouldering additional mortgage risk.
- The Biden Administration’s broader economic policy has created high inflation and put our economy at risk of a recession. These changes will result in riskier loans purchased by the Government-Sponsored Enterprises (GSEs).
- The politicization of these Loan Level Price Adjustments (LLPAs) is a departure from the norm.
- Moving away from risk-based pricing to cross subsidize higher risk borrowers turns taxpayer-backed mortgage lending into a political tool for this Administration.
- Senator Schmitt previously put out a statement on the Biden Administration’s new rule.
- See the letter here.
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