A case study on the news and the narrative regarding the new mortgage interest pricing.

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BMWTurboDzl

Joined
Apr 15, 2010
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I've been waiting for something external regarding the proposed change in mortgage pricing for borrowers with high vs lower credit scores. As always the devil is in the details and news outlets are loathe to provide the details if doing so doesn't manufacture outrage from viewers and by extension keep them watching that channel.

www.inman.com

Economist explains that controversial FHFA fee change

There's been a lot of talk about the FHFA's fee increase, but this economist thinks that, for the most part, it's much ado about nothing.
www.inman.com www.inman.com
 
Hillbilly Deluxe said:
The bigger question is why is a household with a 680 credit score even trying to obtain a mortgage? You obviously have some work to do with regards to paying your bills.....unless you're on the Dave Ramsey track and can prove financial worthiness.
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680 score doesn't mean people can't pay their bills. It can be a reflection of age where younger people haven't been living long enough to generate an extensive credit profile, people who shun credit in general, or the result of some catastrophic event (Death of a family member, employer goes out of business, Medical event, etc.). In any case there aren't too many borrowers with scores under 700 in the conventional space.
 
Hillbilly Deluxe said:
The bigger question is why is a household with a 680 credit score even trying to obtain a mortgage? You obviously have some work to do with regards to paying your bills.....unless you're on the Dave Ramsey track and can prove financial worthiness.
Click to expand...
Well....probably because in many parts of the country rent FAR exceeds what a mortgage payment would be if you put the proper amount down.
 
Hillbilly Deluxe said:
The bigger question is why is a household with a 680 credit score even trying to obtain a mortgage? You obviously have some work to do with regards to paying your bills.....unless you're on the Dave Ramsey track and can prove financial worthiness.
Click to expand...
People gotta have a place to live. Paying rent guarantees you will never see that money again. You are eigher paying your mortgage or someone else's.
 
CKN said:
Well....probably because in many parts of the country rent FAR exceeds what a mortgage payment would be if you put the proper amount down.
Click to expand...
It's insane. A few months ago my sister was looking at renting a house, she looked at some single level w/garages for rent with tiny yards in a town nearby. They weren't anything special. The rent was close to $3,000 a month.
 
BMWTurboDzl said:
I've been waiting for something external regarding the proposed change in mortgage pricing for borrowers with high vs lower credit scores. As always the devil is in the details and news outlets are loathe to provide the details if doing so doesn't manufacture outrage from viewers and by extension keep them watching that channel.

www.inman.com

Economist explains that controversial FHFA fee change

There's been a lot of talk about the FHFA's fee increase, but this economist thinks that, for the most part, it's much ado about nothing.
www.inman.com www.inman.com
Click to expand...
Wow, well I would have to disagree with this story in the strongest sense of the word. This is an opinion piece, the writer clearly voices what "he" thinks.
The problem with mass media in todays world, let's forget all the facts that low credit score borrowers are getting a break and high credit score borrowers are paying more. That is fact everything else is his thoughts.
This story is a spin job and much the public believes this stuff, after all it's why the USA owes 33 trillion dollars and 10% of our GDP, still rapidly climbing paying the interest on that debt, double the price of the defense budget.

In the writers own words = "No one is arguing that upfront fees for households with lower credit scores weren’t reduced, but I actually don’t see a problem with that."

So I am asking, sincerely, what is the sense of this story? Answer = to convince you of nothingness. His words right above that I quoted say that. Mass media is such a big business, spin anything, make it sound good, just get people to go to the page and click on the ads even if it's all lies made to sound truthful .
 
So, basically those with above median credit scores will see their fees increase disproportionally, but still be paying less fees overall as a percentage of their loans. Which, the allocation of the increase, is counterintuitive but that can be another short-lived thread.

"Secondly, although I can’t disagree with anyone who states that families with lower credit will see fees go down and – generally speaking – they will go up for those with better credit, but people are confusing the CHANGE in the fee with the ACTUAL fee itself."

At the end of the day, those with higher credit scores will see a higher increase in (but not necessarily total) fees compared, with those of lower scores, which is what a lot of the hullabaloo and grandstanding was about, though with some not quite getting the details correct.

I do agree with the writer though, folks report with a spin.....as does he.
 
JeffKeryk said:
People gotta have a place to live. Paying rent guarantees you will never see that money again. You are eigher paying your mortgage or someone else's.
Click to expand...

I paid rent for about 20 months when I moved to a new area, new job, etc. Started building a house about 16 months in, moved in 4 months later.

The wife and I rented a house in 2014-2015 for 15 months (we lived there for 12, moved out after horrible HVAC system was noticed, thankfully the landlord found a new sucker and we were able to break the lease.) We had up and moved to a new area, we wanted to learn it before we bought again.

Neither time is regretful. Not even the recent time.

There's people that rent their entire lives and it isn't necessarily about credit score. That's what they want to do or they have little to no life experiences outside of renting. Not my problem.

Yes, you are either paying your mortgage or someone else's. It costs money to live. A home is not an investment. It's a place to live. If it goes up in value, good. Otherwise, people need to understand there's maintenance, taxes, repairs, etc. with either renting or buying.

No one should be punished for a good credit score and those with poor credit scores shouldn't be rewarded. That is bass-ackwards teaching of behavior.
 
CKN said:
Well....probably because in many parts of the country rent FAR exceeds what a mortgage payment would be if you put the proper amount down.
Click to expand...

Well there was also a time recently, as in 2009-2014 or so, where most of the young people who were 22-35 at the time, swore up and down they would NEVER EVER NEVER buy a house because of what happened in the years prior. They would never buy a house, they would always rent.


Well, that created a demand for rental property. You create a demand for anything and the price escalates to what the market bears. Lots of over-educated people hate that, mainly because they have chosen to be brainwashed by low-information/IQ individuals who have an agenda with regard to having a dumb general population.
 
jeepman3071 said:
It's insane. A few months ago my sister was looking at renting a house, she looked at some single level w/garages for rent with tiny yards in a town nearby. They weren't anything special. The rent was close to $3,000 a month.
Click to expand...
She could move south and own a home for that and much, MUCH less...ton of people from CT here, actually will be my new next door neighbor, great people, already know them well as the were checking on the construction also their friends already here down the block.

People feeling the northeast for a reason as we did.
 
alarmguy said:
She could move south and own a home for that and much, MUCH less...ton of people from CT here, actually will be my new next door neighbor, great people, already know them well as the were checking on the construction also their friends already here down the block.

People feeling the northeast for a reason as we did.
Click to expand...

Fleeing?


No, we're closed. Except for that length application process.
 
alarmguy said:
Wow, well I would have to disagree with this story in the strongest sense of the word. This is an opinion piece, the writer clearly voices what "he" thinks.
The problem with mass media in todays world, let's forget all the facts that low credit score borrowers are getting a break and high credit score borrowers are paying more. That is fact everything else is his thoughts.
This story is a spin job and much the public believes this stuff, after all it's why the USA owes 33 trillion dollars and 10% of our GDP, still rapidly climbing paying the interest on that debt, double the price of the defense budget.

In the writers own words = "No one is arguing that upfront fees for households with lower credit scores weren’t reduced, but I actually don’t see a problem with that."

So I am asking, sincerely, what is the sense of this story? Answer = to convince you of nothingness. His words right above that I quoted say that. Mass media is such a big business, spin anything, make it sound good, just get people to go to the page and click on the ads even if it's all lies made to sound truthful .
Click to expand...

The point is that context matters. In this case the degree of preferred pricing was reduced for some borrowers with higher scores while the additional cost was reduced for borrowers with lower scores. Pricing was already going to get worse due to the fact that the GSE's are having to rebuild their capital base in order to be better positioned themselves to get out from under the USG conservatorship. The borrowers with better scores (avg for GSE portfolio is around 755) represent the overwhelming majority of loans on the books where as lower score borrowers are but a fraction. The GSE's also charge more on investment properties (ex. Rental house).

The one thing we don't know is how much of the lost pricing break borrowers with good scores can be attributed to the reduced pricing penalty for those with worse scores vs the higher capital requirements for the GSEs. IMO that number represents a small fraction of the lost pricing being that only 3 percent* of the loan portfolio falls into the bracket of lower scores which received a reduced penalty. I can also tell you that the loan amounts in this credit bracket are not that high either.

On an aside without the GSE's the 30 yr fixed rate mortgage would not exist. So right off the bat the system is already subsidizing ALL homeowners who have a mortgage.

*Per 2023 Q1 10-K of Fannie Mae
 
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wings&wheels said:
So, basically those with above median credit scores will see their fees increase disproportionally, but still be paying less fees overall as a percentage of their loans. Which, the allocation of the increase, is counterintuitive but that can be another short-lived thread.

"Secondly, although I can’t disagree with anyone who states that families with lower credit will see fees go down and – generally speaking – they will go up for those with better credit, but people are confusing the CHANGE in the fee with the ACTUAL fee itself."

At the end of the day, those with higher credit scores will see a higher increase in (but not necessarily total) fees compared, with those of lower scores, which is what a lot of the hullabaloo and grandstanding was about, though with some not quite getting the details correct.

I do agree with the writer though, folks report with a spin.....as does he.
Click to expand...
What was the spin?
 
Hillbilly Deluxe said:
I paid rent for about 20 months when I moved to a new area, new job, etc. Started building a house about 16 months in, moved in 4 months later.

The wife and I rented a house in 2014-2015 for 15 months (we lived there for 12, moved out after horrible HVAC system was noticed, thankfully the landlord found a new sucker and we were able to break the lease.) We had up and moved to a new area, we wanted to learn it before we bought again.

Neither time is regretful. Not even the recent time.

There's people that rent their entire lives and it isn't necessarily about credit score. That's what they want to do or they have little to no life experiences outside of renting. Not my problem.

Yes, you are either paying your mortgage or someone else's. It costs money to live. A home is not an investment. It's a place to live. If it goes up in value, good. Otherwise, people need to understand there's maintenance, taxes, repairs, etc. with either renting or buying.

No one should be punished for a good credit score and those with poor credit scores shouldn't be rewarded. That is bass-ackwards teaching of behavior.
Click to expand...
A home is both. Paying rent makes sense for some and at different periods in one's life. I sold a home at a loss in the down market about 1994 and bought the worst home in Los Gatos, considered a good neighborhood. Well, this home is paid off and worth $2M. So yeah, no rent or payments. Just a nice peaceful place to live for peanuts. Having a home free and clear is an incredible feeling. I am one of the lucky ones, for sure...
 
alarmguy said:
Thats the great part of being a free person. You're free to do as you wish..
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Yup. Living in a great place free and clear is pretty amazing. Not a care in the world. It takes a long time, persistance and a lot of work to get there, but if you are lucky enough to get there, it makes life simple.
 
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