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CFO Jimmy Patronis: Biden’s Mortgage Redistribution Rule is an Attack on Hard-Working Americans
TALLAHASSEE, FL. – Today, Florida Chief Financial Officer (CFO) Jimmy Patronis and 33 other State Financial Officers from 27 states expressed deep concerns in a letter to President Biden regarding a Federal Housing Finance Agency (FHFA) rule to force Americans with good credit scores to pay more each month for their mortgages and crediting the additional payments to the loans of higher-risk borrowers.
Florida CFO Jimmy Patronis said, “Biden and the FHFA have finally lost their minds completely. Their plan to redistribute mortgage fees from those with good credit to those with poor credit smells a lot like socialism and sounds like a way to hurl our economy into another housing crisis. I was in the Florida Legislature when the last sub-prime mortgage induced recession hit our state and I don’t want Floridians to live through that again. These are exactly the type of harebrained policies that Washington uses to attack the middle-class and hard-working Americans that choose to play by the rules. I hope the Biden Administration will come to their senses and end this rule immediately before it causes irreparable financial damage to Floridians who are working every day to live the American Dream.”
Read the full letter below and HERE:
Dear President Biden and Director Thompson:
We write today expressing our deep concern with the new Federal Housing Finance Agency policy which goes into effect today and will have the net effect of making it significantly more expensive for people with good credit to buy houses. This new policy will force homebuyers with good credit to pay more on their mortgage every single month.
In other words, the policy will take money away from the people who played by the rules and did things right – including millions of hardworking, middle-class Americans who built a good credit score and saved enough to make a strong down payment. Incredibly, those who make down payments of 20 percent or more on their homes will pay the highest fees – one of the most backward incentives imaginable. For decades, Americans have been told that they will be rewarded for saving their money and building a good credit score. This policy turns that timetested principle upside down.
And how will these new junk fees be used? To subsidize higher-risk borrowers by handing out better mortgage rates to people with lower credit ratings who have saved less for a down payment. We all want to increase home ownership across our great country – that’s a central component of the American Dream. And we recognize that there’s a gap in access to credit and that low credit scores are a significant barrier to buying a home. Moreover, federal programs exist to address affordable housing assistance and the new policy does nothing to address the shortage of housing inventory.
But the right way to solve that problem is not to use the power of the federal government to penalize hardworking, middle-class American families by confiscating their money and using it as a handout. The right way is to implement policies which will reduce inflation, cut energy costs and bring lower interest rates. Doing so will enable more families to save and improve their credit scores. Increased financial literacy efforts must also be part of the solution.
It is already clear that this new policy will be a disaster. It amounts to a middle-class tax hike that will unfairly cost American families millions upon millions of dollars. And – at a time when the real estate market has already slowed considerably due to high interest rates – it will further depress home sales. The practice by FHFA of making substantive policy changes without utilizing the federal rulemaking process is inappropriate.
We urge you to take immediate action to end this unconscionable policy.
About CFO Jimmy Patronis
Chief Financial Officer and State Fire Marshal Jimmy Patronis is a statewide elected official and a member of Florida’s Cabinet who oversees the Department of Financial Services. CFO Patronis works each day to fight insurance fraud, support Florida’s firefighters, and ensure the state’s finances are stable to support economic growth in the state. Follow the activities of the Department on Facebook (FLDFS) and Twitter (@FLDFS).