Having good credit is now frowned upon

[gouch]

The real outrage should be as to why the fees are based on a person's credit score to start with. The fee is a fee not a loan, so it has nothing to do with credit worthiness. It's like going to the grocery store and having the price you pay for milk depend on how late your credit card payment was last month.

 

[noharleyyet]

Poors...

 

[AvidIndoorsman]

 

[Beignet]

Good giffery there, fellas.

 

[SAJ-99]

The fee is a fee not a loan, so it has nothing to do with credit worthiness.

It absolutely does. The "fee" is a charge to compensate the lender for the risk of default, just like with any debt instrument. We don't get to borrow at the same rate as the US government for this very reason. This topic was discussed in the Money and Finance forum. Over the last 15, credit scores have become less reliable as a predictor of default, but are still used widely. These latest adjustments reflect the new data. It is difficult to break any type of risk down to a single number, but as an example a borrower with a 640 credit score might be a better risk than a borrower at 780 buying a second house.

 

[gouch]

It absolutely does. The "fee" is a charge to compensate the lender for the risk of default, just like with any debt instrument. We don't get to borrow at the same rate as the US government for this very reason. This topic was discussed in the Money and Finance forum. Over the last 15, credit scores have become less reliable as a predictor of default, but are still used widely. These latest adjustments reflect the new data. It is difficult to break any type of risk down to a single number, but as an example a borrower with a 640 credit score might be a better risk than a borrower at 780 buying a second house.

The fees cover the cost of possessing the loan and usually wouldn't even cover the loss of the first month's interest. Risk is compensated by increased interest rate and even that is a scam since home loans are not unsecured loans.

 

[BigHornRam]

"Why are these changes being made?

These changes are part of the Federal Housing Finance Agency’s (FHFA) broader examination of fees to provide “equitable and sustainable access to homeownership” and shore up capital at Freddie Mac and Fannie Mae."

Go woke, go broke!

 

[SAJ-99]

The fees cover the cost of possessing the loan and usually wouldn't even cover the loss of the first month's interest. Risk is compensated by increased interest rate and even that is a scam since home loans are not unsecured loans.

They can either be upfront fees or ongoing fees. Most people don't pay the fee upfront, so it ends up going into the rate. The fee is literally to compensate the lender for providing the guarantee. The guarantee is required by those that buy the mortgage and that guarantee keeps the rates lower. Foreclosing on the mortgage is not cost-less.

I'm curious, what do you think a mortgage rate should be?

 

[Beignet]

Go woke, go broke!

I'm certainly going to boycott this nonsense by not taking out a mortgage on any half million dollar fixer uppers anytime soon. Take that, Fannie Mae and Freddie Mac! Once the entire mortgage industry has gone asunder you can come pry your extra $375 out of my cold dead hands.

 

[BigHornRam]

The real outrage should be as to why the fees are based on a person's credit score to start with. The fee is a fee not a loan, so it has nothing to do with credit worthiness. It's like going to the grocery store and having the price you pay for milk depend on how late your credit card payment was last month.

You must not know the Golden Rule. He who owns the gold, makes the rules.

 

[noharleyyet]

You must not know the Golden Rule. He who owns the gold, makes the rules.
View attachment 273315

You can bet their other lobby is better at arm bending, pocket stuffing, and back patting.