Senator Schmitt Statement on Biden’s New Mortgage Rule

WASHINGTON – Today, Senator Eric Schmitt released the following statement on President Biden’s proposed mortgage rule that aims to punish responsible Americans in order to subsidize high risk loan borrowers:  

“Joe Biden’s war on merit is destroying the American Dream for those who have worked hard, saved, and built good credit. This upside-down mortgage policy makes no economic sense for lenders, is fundamentally unfair, and punishes hard working folks who are just trying to play by the rules. In the end, this is pure unadulterated socialism. This rule underscores how detached from reality Joe Biden is when it comes to working class Missourians,” said Senator Eric Schmitt.    

Background:

• These changes penalize borrowers for doing the right thing. Saving up to put more money into a down payment, or increasing one’s credit score by responsibly paying back debts will now result in higher prices.
  • By moving away from risk-based pricing on specific loan characteristics to cross subsidize borrowers who are more likely to default, the taxpayer will end up shouldering additional mortgage risk.
• The Biden Administration’s broader economic policy has created high inflation and put our economy at risk of a recession. These changes will result in riskier loans purchased by the Government-Sponsored Enterprises (GSEs).
  • The politicization of these Loan Level Price Adjustments (LLPAs) is a departure from the norm.
  • Moving away from risk-based pricing to cross subsidize higher risk borrowers turns taxpayer backed mortgage lending into a political tool for this Administration.

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