Biden’s New Mortgage Rules Raise Concerns Over Similarities That Led to 2008 Financial Crisis

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On Monday new mortgage rules under the Biden administration went into effect which could increase fees for borrowers with good credit scores to offset costs for less qualified buyers.  A group of  Republican senators sent a letter to Federal Housing Finance Agency Director Sandra Thompson, stating, “The fact that a proposal flaunting credit risk is being openly pushed by FHFA just a decade-and-a-half after the housing-led 2008 financial crisis is staggering.”  There has also been pushback from many mortgage industry leaders. Richard Stern, director of the Grover M. Hermann Center for the Federal Budget at the Heritage Foundation, said the new rules “muddy the waters” for the financial system. He said, “That is exactly what happened when it turned into the subprime mortgage crisis.  It’s creating a system where you can’t rely on the risk numbers, you can’t make any real predictions about what’s going on.”