As part of its push for more affordable housing, the Federal Housing Finance Agency is enacting new fee changes for Americans looking to purchase a home or refinance a mortgage, the Washington Times reported.
Under a new federal rule going into effect on May 1, Americans will good credit scores will have to pay higher mortgage rates and fees to subsidize homebuyers with risky credit scores.
The rule change will apply to mortgages originating at private banks and the federally-backed Freddie Mac and Fannie will enact loan-level price adjustments.
According to mortgage industry experts, homebuyers with a credit score of 680 or more will pay an estimated $40 a month more on a mortgage of $400,000. Additionally, those who put down 15-20 percent on a home will be hit with the largest fees.
The new fee adjustment will only apply to those refinancing or purchasing homes after May 1.
Mortgage lenders and real estate agents criticized the move, suggesting that the fee changes will punish those with high scores looking to purchase or refinance.
Ian Wright, a senior loan officer at San Francisco’s Bay Equity Home Loans, told the Washington Times that it doesn’t make sense to penalize borrowers with high credit scores or larger down payments. He said the home-buying process is already overwhelming for consumers, and the new rules will only overcomplicate the process, further confusing borrowers.
Wright explained that the rule will also “cause customer-service issues for lenders” and loan officers since borrowers will not understand why the fees and interest rate have changed. He added that decisions like this clearly aren’t made “by folks that understand the entire mortgage process.”
David Stevens, a former Federal Housing Administration commissioner under the Obama administration, told the Washington Times that having the fees go into effect during the “traditional spring home purchase season” will cause “extreme confusion.”
Noting the fees won’t work as intended, Stevens added that it is coming at the worst possible time “for an industry struggling to get back on its feet” after the last year. He said enacting the fee changes in the spring “is almost offensive to the market, consumers, and lenders.”