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Is Biden's Credit Score Screw Job On Mortgage Pricing Even Legal?

Tyler Durden's Photo
by Tyler Durden
Sunday, Apr 23, 2023 - 02:30 PM

Authored by Mike Shedlock via MIshTalk.com,

Previously, I wrote about new rules on mortgage rates in which the better your credit score, the higher your effective interest rates. This is an update...

New Rule: The Better Your Credit Score the Higher Your Mortgage Rate

Please consider New Rule: The Better Your Credit Score the Higher Your Mortgage Rate

Under the new rules, high-credit buyers with scores ranging from 680 to above 780 will see a spike in their mortgage costs – with applicants who place 15% to 20% down payment experiencing the biggest increase in fees.

Loan Level Price Adjustments

Mortgage lender Fannie Mae added some new credit score ranges making some before-after comparisons impossible to calculate. 

You can find the complete tables on Fannie Mae's Loan-Level Price Adjustment Matrix page. 

My lead chart shifted the columns so they line up making the credit score visualization easier.

Credit Score Matrix

  • Green: > 740

  • Pink: 720-739

  • Yellow: 700-719

  • Orange: 680-699

  • Blue: 640-659

Someone with a credit score 720-739 with a 20% to 25% down payment has a LLPA of 0.50% before May 1 and 1.25% May 1 or later. 

That is a whopping three-quarter point difference. 

The beneficiaries are those with worse credit ratings. For example, consider a drop from 3.25% to 2.50% for someone with a credit score of 640-659 and a down payment of 20% to 25%.

The idea that people will not notice a three-quarter point hike seems preposterous.

How Many People Are Impacted?

Everyone with a credit score 680 and over is dinged. Everyone with a credit score below 680 is a winner. 

This is truly incomprehensible to me. The average credit score is 710 so the average person takes a hit. 

More specifically, Experion notes that only 35 percent of consumers have a credit score below 680.  

Pandora's Box

The Lower Your Credit Score Strategy

Dangerous and Misguided

Is This Screw Job On Mortgage Pricing Even Legal?

Yes, we have graduated income taxes and that is legal. We also have adult prices vs kids prices for numerous things. And we have things like senior citizens days. 

But can we legally charge someone more for a loaf of bread if they make too much money? Similarly, can we unjustly penalize people because their credit score is too good? 

I don't know. 

But I do know blatant woke stupidity when I see it. Expect someone to file a lawsuit.

California Utilities Seek to Charge People Based On Income, Not Energy Usage

Meanwhile, please note California Utilities Seek to Charge People Based On Income, Not Energy Usage

Under a new utility proposal, monthly bills in California will include a fixed charge based on household income. The proposal is Marxist agenda. 

And under this inane proposal people may pay for services they do not use at all. Expect a legal test of this too, assuming the bill passes.

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