The end result of socialism is that everyone lives in poverty except the ruling class. When you continually take money from people who earn it and give it to people who didn’t, those who are working lose their incentive to work. Look up the history of the Pilgrims to see how the communist society called for in their Charter worked. The pilgrims nearly starved because people always seemed to find excuses for not working when there was no reward for working hard. When the free enterprise system was put into place, the colony prospered. Now we are seeing socialism creep into the mortgage lending business.
On April 16th, The New York Post reported the following:
A little-noticed revamp of federal rules on mortgage fees will offer discounted rates for home buyers with riskier credit backgrounds — and force higher-credit homebuyers to foot the bill, The Post has learned.
Fannie Mae and Freddie Mac will enact changes to fees known as loan-level price adjustments (LLPAs) on May 1 that will affect mortgages originating at private banks nationwide, from Wells Fargo to JPMorgan Chase, effectively tweaking interest rates paid by the vast majority of homebuyers.
The result, according to industry pros: pricier monthly mortgage payments for most homebuyers — an ugly surprise for those who worked for years to build their credit, only to face higher costs than they expected as part of a housing affordability push by the US Federal Housing Finance Agency.
“It’s going to be a challenge trying to explain to somebody that says, ‘I worked my whole life for high credit and I’ve put a lot of money down and you’re telling me that’s a negative now?’ That’s a hard conversation to have,” one worried Arizona-based mortgage loan originator told The Post.
“It’s unprecedented,” added David Stevens, who served as Federal Housing Administration commissioner during the Obama administration. “My email is full from mortgage companies and CEOs [telling] me how unbelievably shocked they are by this move.”
Essentially, people who have been fiscally responsible will be penalized, and people who have not been fiscally responsible will pay less. This will not incentivize responsible spending habits and may bring us back to the crisis of 2008 when the sub-prime mortgage market collapsed. Hasn’t the government learned from its past mistakes?