Biden Plan Rewards Bad Credit and Penalizes Good Credit

Biden’s Federal Housing Finance Agency has announced plans to increase the loan-level pricing adjustment for people with credit at or above 640 to offset the cost of mortgages for people with credit under 640.  The more good credit you have, the more you pay. The less good credit you have, the less you pay. A 740 borrower will see their fee quadruple, while a person with a 639 credit will see their credit reduce by two-thirds.

The plan is a simple redistribution of the wealth plan done with a regulatory order from a quasi-independent but mostly governmental agency at the behest of the mass-mailer President and the team that operates the Biden.

The Daily Signal pointed out:

Forcing high credit-score families to subsidize those with subpar credit will perversely result in some less-well-off (but financially responsible) families paying for the imprudent decisions of their higher-income (but financially irresponsible) neighbors.

In some instances, the slightly higher debt-to-income ratios resulting from adding this fee into the requested mortgage will exceed DTI limitations, artificially shrinking the housing purchase options.

Meanwhile, some with poor credit will find themselves now equipped, thanks to the subsidy, to obtain a mortgage previously out of reach.  

This is just another example of children running a complicated machine on simplistic ideals and even more simplistic math. When you scale out these utopian schemes, they inevitably lead to further exploitation of the very people they claim to be serving. This is going to be no exception.