During his latest "My Take," "Varney & Co." host Stuart Varney discusses Biden's new mortgage fees rule as he draws comparisons to the ‘07-’08 financial crisis, arguing the president's new affordable housing initiative is "pure politics."
STUART VARNEY: When I saw this, I thought here we go again.
We're doing the same thing now that we did in the financial crisis over a decade ago.
That is, we are giving favorable loan terms to people who probably can’t repay.
On May 1st, new rules on mortgage fees go into effect.
BIDEN RULE WILL REDISTRIBUTE HIGH-RISK LOAN COSTS TO HOMEOWNERS WITH GOOD CREDIT
If you've got good credit, you'll pay more. If you've got a risky credit background, you pay less.
That stands the whole idea of risk management on its head.
Paying more because you have good credit, and paying less because you have bad credit, is not the way it’s supposed to be.
And it doesn't work: look what happened in ‘07 and ‘08!
HOME PRICES SEE BIGGEST ANNUAL DROP IN OVER A DECADE: REPORT
In effect, it punishes people who played by the rules. Here's how that works:
If your credit score is solid, 680 to 780, you will see an increase in mortgage fees, and if you also have a big down-payment, 15 to 20%, your fees will be higher still!
You're a success: good credit. Big down-payment. But you'll pay for that success.
This is pure politics. Biden wants to help "disadvantaged communities," so he puts his thumb on the scale.
Bad credit wins. Good credit loses. And that's not right.
