New Jersey: Get Ready For Punitive, New Mortgage Fee Scheme

At first glance, this new President Joe Biden mortgage scheme would appear to be a cruel joke. It couldn’t possibly be true?

Yet, it is going to happen very soon and it goes like this.

If you have a high credit score … you will subsidize those borrowers who have a low credit score.

Yes, you will be penalized for being responsible and having a high credit score.

Can you believe this?

Let me share exactly what this will look like. If you have a 620 credit score, you will get a 1.75 percent fee discount.

If you have a 740 preferred credit score, you will pay an increased 1 percent fee.

It’s set to go until effect on new mortgages and refinancing as of May 1, 2023.

Specifically, if you have a credit score of 680 or higher, you will be charged with what the Biden Administration is calling Loan-Level Price Adjustment or LLPA.

Mortgage banks, lenders and real estate lenders are opposed to this new scheme, because it penalizes those who have worked to build good credit.

The Biden administration scheme will also penalize those who provide larger down payments.

With mortgage rates well beyond 6 percent, this costly scheme could not come at a worse time.

In order to get the monthly mortgage costs down, borrowers are already paying additional points and fees.

Thus new burden will be placed on top of this and the current higher rates.

There has been a more than 3 percent increase in mortgage rates since Biden became President.

Convoluting overall pricing and penalizing those with high credit scores is not a good approach for the mortgage industry.

There is already a severe shortage of affordable homes in New Jersey and throughout the country.

In less than two weeks, this bad scheme is going to make things even worse.