A new Biden administration rule has been largely criticized by industry experts who warn that it will “overcomplicate things for consumers” and “create extreme confusion.”

On May 1, a new rule from the Federal Housing Finance Agency will take effect that will force home buyers with good credit to pay more for their mortgages and fees in order to subsidize loans to higher-risk borrowers who are also in the market to buy a home.

Specialists in the mortgage industry report that homebuyers with credit scores of 680 or higher will pay about $40 more per month on a $400,000 mortgage. Those who make down payments of 15% to 20% will get stuck with the largest fees.

This would allow consumers with lower credit ratings and less money for a down payment to qualify for better mortgage rates than they would have previously.

The Federal Housing Finance Agency Director, Sandra Thompson, explained that these rules are meant to “increase pricing support for purchase borrowers limited by income or by wealth.”

“Why was this done? The answer is simple, it was to try to narrow the gap in access to credit, especially for minority home buyers who often have lower down payments and lower credit scores,” Stevens added. “The gap in homeownership opportunity is real. America is facing a severe shortage of affordable homes for sale combined with excessive demand causing an imbalance.”

However, many experts have spoken out against this rule, arguing that it will do more harm than good to both the market and the consumers.

Ian Wright, a senior loan officer at Bay Equity Home Loans, spoke to The Washington Times about the problems associated with this new rule, criticizing it for overcomplicating the entire home-buying process.

“The changes do not make sense. Penalizing borrowers with larger down payments and credit scores will not go over well,” said Wright. “It overcomplicates things for consumers during a process that can already feel overwhelming with the amount of paperwork, jargon, etc. Confusing the borrower is never a good thing.”

A former commissioner of the Federal Housing Administration during the Obama administration, David Stevens, also questioned the new rule in a social media post, pointing out how the housing market is already struggling in the wake of many interest rate increases by the Federal Reserve.

“This confusing approach won’t work and more importantly couldn’t have come at a worse time for an industry struggling to get back on its feet after these past 12 months,” Stevens wrote. “To do this at the onset of the spring market is almost offensive to the market, consumers, and lenders.”

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