The Federal Housing Finance Agency is changing fees on mortgages backed by Freddie Mac and Fannie Mae. Starting today, these new rules will affect borrowers across different credit score ranges as part of the Biden administration’s plan to expand access to homeownership. The new structure has sparked debate: critics say it could punish homeowners who worked hard to keep their credit scores high while housing advocates argue it will help first-time and low-income buyers during a period of time when housing prices and mortgage rates are high.
If you are looking for more context on this matter, please consider Vanessa Perry, a professor of marketing and strategic management and public policy at the George Washington University. Perry co-authored the 2020 State of Homeownership in Black America report, which analyzed the current state of Black homeownership and market opportunities for Black homebuyers. It also offered recommendations for public policy interventions to help alleviate housing disparities.
In a recent interview with Bloomberg News, Perry addressed the pros and cons of the policy.
“I would have the same advice for people with both high credit scores and low credit scores. And that advice is: Talk to your lender and perhaps talk to more than one, making sure they present you with options including what it would cost you both upfront and over time for a conventional loan, as well as a Federal Housing Administration loan,” Perry told Bloomberg.
“That’s important because these changes have shifted the competitive landscape between these two types of mortgages. Depending on a household’s financial picture, one may actually be more advantageous than the other. These fee changes have altered that choice and made it less straightforward than maybe it would have been before. Borrowers could really end up saving significant amounts of money in one market versus the other. So it is definitely more important now to have that comparison upfront.”
If you would like to speak with Prof. Perry, please contact GW Media Relations Specialist Cate Douglass at [email protected].
-GW-
