Reply to Hike in payments for good-credit homebuyers to subsidize high-risk mortgages

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Can someone help me understand this in a neutral, nonpolitical way?

Is this accurate?

The mortgage companies need to raise a certain amount of money through fees. Before, people with lower credit scores were charged nearly all of the money needed. Now, the charges are more even, and the people with higher credit scores will pay a higher percentage than the people with lower credit scores.[/quote]

No. That is not correct.

First, if you are getting a conventional loan this does not affect you.

If you are getting a FHA loan, there are fees.

People with good credit scores paid insanely low fees, people with bad scores paid insanely high fees. These fees did not relate in any way to actual risk,

People with good credit scores will still pay very low fees perhaps 1% vs .25%, people with lower credit scores will pay reasonable fees, perhaps 2.5% instead of 4%.

People with good credit are still paying lower fees than people with bad credit.

If you have a good credit score you probably don’t need and FHA loan you probably will qualify for a conventional mortgage and this will not affect you.[/quote]

If the fees for higher risk borrowers didn’t correlate to risk, they could have just lowered those fees to reflect the true risk. They are raising fees on low risk borrowers to make up the difference needed to cover the risk on higher risk borrowers. It doesn’t need to be as much %-wise because the lower risk borrowers are borrowing more $$. [/quote]

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