Jim Parrott, nonresident fellow at the nonprofit research organization Urban Institute, and Janneke Ratcliffe, vice president for housing finance policy at the institute, wrote: Some housing experts questioned the assertion that the new plan penalizes borrowers with good credit to subsidize those with poor credit. Many of the social media posts making the claim referred to reporting by the Washington Times, which wrote that the new federal rule by the FHFA would force homebuyers with good credit scores "to pay higher mortgage rates and fees to subsidize people with riskier credit ratings who are also in the market to buy houses." We reached out to one of the experts quoted by the Washington Times, Ian Wright, for an explanation of how the new fee structure "penalized" borrowers with good credit scores and larger down payments. "I can also confirm that the President has not spoken about this issue." Similarly, Adam Russell, senior communications specialist at the FHFA denied that Biden had instructed the agency to make the changes. " The White House does not direct the actions of independent agencies," a White House spokesperson told Snopes. However, the Biden administration was not forcing the adjustments via legislation or an executive order, and it was unknown if, or to what extent, the president supported them, or had a hand in them being implemented. According to Redfin, a real estate company, upfront costs include "earnest money, the inspection fee, and the appraisal fee." The changes – which we unpack in detail below – will take effect May 1, 2023. The rumors were based on real changes to what the Federal Housing Finance Agency (FHFA) calls "upfront fees," or fees borrowers pay when they're closing on a mortgage that are meant to cover the lender's expenses. President Joe Biden was changing how much money homebuyers will pay when they're closing on a property based on their credit scores. "The Biden administration raises mortgage payments for good credit & higher down payment homebuyers starting May 1st, in order to foot the bill for high-risk mortgage borrowers with lower credit scores & lower down payments," claimed one tweet. In April 2023, numerous articles and social media posts claimed U.S. There was no congressional measure or executive order related to the changes, and, based on our research, Biden had not publicly commented on the FHFA's decision to change the fee structure. Moreover, the White House rejected that claim. President Joe Biden was pushing for, or had introduced, these changes were not supported by evidence. And even those with higher credit scores will pay less once the new plan takes effect. Conversely, people with lower credit scores will pay less. Generally speaking, under the new rule some people with higher credit scores will pay more in fees than those in similar situations under the old rule.Those fees are based on "risk characteristics of the borrowers and the loans they are obtaining," which can include credit scores. The new pricing framework will change what the agency calls upfront fees, or payments homebuyers make when they close on a property.In January 2023, the Federal Housing Finance Agency (FHFA), an independent regulatory agency, announced a new pricing framework for Fannie Mae and Freddie Mac, two mortgage companies under FHFA conservatorship, effective May 1, 2023.
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