Biden’s Mortgage Redistribution Rule That GOP Says “Establishes a Perverse Incentive” May Burden Minority Group
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GOP senators have accused the Biden Administration’s Federal Housing Finance Agency (FHFA) of playing politics with the U.S. housing market in the latest rule on home mortgages.
Home buyers with good credit will pay an additional fee to subsidize high-risk mortgages to those with lower credit scores.
Loaning money to risky buyers is never a good idea and will put the “entire market in danger” warned Republicans.
Lending institutions use credit scores as an important factor in determining the creditworthiness of a homebuyer. It’s a factor in qualifying a borrower for a loan amount and interest rate.
Richard Stern, director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation, characterized the new rules as a tax increase on the most qualified buyers.
“It is mechanically a tax increase to cover an increase in welfare. There’s no other way to spin it,” Stern said to Fox News Digital.
“A government-sponsored entity is saying that if you have good credit, we’re going to have you pay more. And we’re going to use that to have other people pay less who have less money and a lower credit score.”
Besides the rule being anti-American, it may have a disproportionate effect on Asian Americans who as a group have better credit ratings than any other “racial demographic.”
But, according to a 2021 study by the Urban Institute, Asian Americans have a lower homeownership rate than White Americans.
One reason for the disparity, the study found, is that Asian Americans face mortgage application denials more often than White Americans.
“We found that the denial rate for Asian mortgage applicants is 8.7%, compared with 6.7% for White mortgage applicants,” the authors of the study wrote.
“Asian applicants are denied more frequently than White applicants at all income levels,” the study notes.
“In 2019, median income was $107,000 for Asian applicants and $82,000 for white applicants. For Asian applicants with annual incomes below $50,000, 16.3% were denied a mortgage, compared with 11.3% of White applicants in that income bracket.”
“In metropolitan areas with large numbers of Asian mortgage applicants, we found that the denial gap persists and holds regardless of home price tier,” the authors wrote.
“This finding suggests that Asian applicants are consistently denied more frequently than White applicants, regardless of home price,” the study states.
“More research is needed to understand why Asian homebuyers are denied mortgages more frequently than White borrowers, despite having, on average, higher credit scores and higher incomes,” the study concluded.
“Failing to address this denial gap would keep more potential Asian homebuyers out of homeownership and widen the homeownership gap between Asian and White households.”
“The reason we’re having less inclusion, fewer people (making) it up the social ladder, is because the left has controlled the government for the last few decades, increasing regulations, increasing taxes, increasing the size of the government and destroying the free market enterprise system that has lifted so many people out of poverty,” Stern said.
“These bureaucrats and regulators aren’t the ones who are going to be hurt by the collateral damage.”
The left also controls the banking institutions which are disproportionately denying Asian Americans home loans. This new rule is another burden on them as a minority group seeking homeownership.