Treasurers and top finance officials from 27 states have sent President Biden a letter imploring him to end what they call his “disastrous” mortgage redistribution fees, effective May 1.
The Federal Housing Agency is imposing fees up to 0.375% on mortgages taken out by people with good credit. The fees are the highest for those who put a down payment of 15% to 20% or more on a home.
The “junk fees,” as the states dub them, will be used to subsidize mortgages for people with lower credit ratings, with the aim of expanding the reach of affordable housing.
They will cost a majority of hardworking Americans millions of dollars more in mortgage payments, the state finance officials say. Individually, the new fees will cost Americans tens of thousands of dollars more on their mortgages.
Democrats and Republicans alike have blasted the controversial policy, including the former Federal Housing Administrator under President Obama.
Equity, diversity and inclusion has been a lynchpin of Biden’s presidency since he took office in January 2021.
Calling the fees an “absurd, unconscionable handout,” the letter says Biden’s 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.
“Incredibly, those who make down payments of 20% or more on their homes will pay the highest fees—one of the most backward incentives imaginable,” the letter, spearheaded by Pennsylvania Treasurer Stacy Garrity, goes on to say.
Biden’s policy turns hard work towards owning a home, the “time-tested” hallmark of the American Dream, “upside down,” Garrity says.
The state finance officials note that the U.S. offers lower-income and high-risk borrowers federal housing assistance. The new mortgage fees will do nothing to address the problem of affordable housing in the U.S., they add.
Instead, they maintain, the government should lower inflation, reduce energy costs and tamp down interest rates—positive policies for all Americans that will also help the less advantaged improve their credit scores and chances of owning a home.
The treasurers say underwriting mortgages for borrowers with shaky credit histories could put those individuals at higher financial risk.
The 34 treasurers, auditors, revenue commissioners and other officials who signed the letter are from: Alabama, Alaska, Arizona, Arkansas, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Utah, West Virginia, Wisconsin and Wyoming.
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