In a move by the Biden administration, high-credit borrowers are essentially subsidizing lower-credit buyers. How is this even possible you may ask? I’ve collected a few articles below for your information along with commentary from one of my preferred lenders.

From one of my preferred lenders:

Over the last year, Fannie Mae and Freddie Mac have made some significant changes in their pricing framework.  For years their pricing model was generally based on credit scores and down payment.  Last year they announced changes to their pricing for second homes, high-balance loans, and cash-out refinances.  This year they are again making changes. Both last year’s changes and these new changes represent an effort to increase support for borrowers historically hardest hit –those with lower credit scores and less down payment.
Some of the most recent changes include:
  • Adding additional FICO tiers to benefit exceptional credit
  • Adding additional LTV (loan to value) tiers to benefit significant down payment
  • Adding slight cost increases for those in the middle FICO and LTV ranges
  • Reducing the cost for those with limited down payment for a primary residence


This has a lot of people upset. The thought is, “Why should people who worked hard for their good credit scores and the ability to purchase a second home be forced to pay more to subsidize those who have bad credit scores?” Well, that is a great question. We did collect a number of articles for you to review if this is of interest. Ultimately, the new rules have the effect of adjusting the additional loan fees (LLPAs) that borrowers pay based on their credit score and other factors. People with not-so-great credit will still pay more in loan fees, but just not as much as they used to pay. The difference in their fees will be picked up by those with higher credit scores and especially those buying second homes and high-value loans.

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