Wisconsin Treasurer John Leiber has joined a national coalition of state financial officials pushing back against new federal mortgage fees they call “unconscionable.”
A letter, sent Monday to President Joe Biden and Federal Housing Finance Agency Director Sandra L. Thompson, includes the signatures of 33 officials from 26 states – all of whom insist the administration should roll back the modified fee structure that applies to borrowers with more favorable credit profiles.
“This new policy makes it more expensive for people with good credit to buy houses – and that’s absurd,” she said. “Americans who have built a good credit score and saved enough to make a strong down payment should not be penalized and forced to pay more on their mortgage every single month.”
The new rates, which went into effect Monday, raise upfront fees for borrowers with credit scores over 680 and down payments between 15% and 20%. The extra money collected subsidizes buyers with less favorable finances – part of the administration’s strategy to make homeownership more accessible for borrowers with less wealth and upward mobility.
Only mortgages backed by Freddie Mac and Fannie Mae – which included more than half of home loans taken out in 2020 – will see the fee increase.
Garrity and other critics said the backward incentive boils down to a middle-class tax hike that takes “money away from the people who played by the rules and did things right.”
In the letter, the officials shared the administration’s goal of increasing home ownership but said “confiscating” the money from “hardworking, middle-class American families” and using it as a “handout” goes too far.
Instead, they want to see the federal government adopt policies to reduce inflation, cut energy costs, and lower interest rates – all factors that would boost discretionary income and give people more leeway to save for a down payment.
Read the letter here: