Florida Chief Financial Officer Jimmy Patronis joined nearly three dozen other state fiscal managers in rejecting the Biden administration’s plan to jack up fees on good-credit homeowners in the name of equity.
As The Free Press reported last month, the Biden administration adopted a rule allowing for loan-level price adjustments, or LLPAs, which essentially are fees imposed on borrowers with high credit scores to subsidize those with low credit scores.
President Joe Biden sought “to close the racial homeownership gap and get more first-time and low-income buyers through the door.”
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The rule was to take effect on Monday.
“Biden and the FHFA [Federal Housing Finance Agency] have finally lost their minds completely,” Patronis said in a statement Monday.
“Their plan to redistribute mortgage fees from those with good credit to those with poor credit smells a lot like socialism and sounds like a way to hurl our economy into another housing crisis.”
Patronis added that he was in the Legislature the last time a subprime mortgage boondoggle wreaked havoc on the economy.
“I don’t want Floridians to live through that again. These are exactly the type of harebrained policies that Washington uses to attack the middle-class and hard-working Americans that choose to play by the rules,” Patronis said.
“I hope the Biden Administration will come to their senses and end this rule immediately before it causes irreparable financial damage to Floridians who are working every day to live the American Dream.”
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In the letter signed by Patronis and 33 other state-level treasurers and comptrollers, almost all from red states, the group denounced Biden’s “new junk fees” and called on him to take immediate action to end this “unconscionable policy.”
“This new policy … will take money away from the people who played by the rules and did things right – including millions of hardworking, middle-class Americans who built a good credit score and saved enough to make a strong down payment,” the group noted. “Incredibly, those who make down payments of 20 percent or more on their homes will pay the highest fees – one of the most backward incentives imaginable.”
“For decades, Americans have been told that they will be rewarded for saving their money and building a good credit score. This policy turns that time-tested principle upside down.”
Patronis and the others also argued that everyone wants to increase home ownership across the country.
“That’s a central component of the American Dream,” they wrote. “And we recognize that there’s a gap in access to credit and that low credit scores are a significant barrier to buying a home.”
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“But the right way to solve that problem is not to use the power of the federal government to penalize hardworking, middle-class American families by confiscating their money and using it as a handout. The right way is to implement policies which will reduce inflation, cut energy costs and bring lower interest rates. Doing so will enable more families to save and improve their credit scores. Increased financial literacy efforts must also be part of the solution.”
“It is already clear that this new policy will be a disaster. It amounts to a middle-class tax hike that will unfairly cost American families millions upon millions of dollars,” the group added.
“And – at a time when the real estate market has already slowed considerably due to high interest rates – it will further depress home sales. The practice by FHFA of making substantive policy changes without utilizing the federal rulemaking process is inappropriate.”
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