'Unconscionable': 27 States Challenge Biden's Plan To Punish Home Buyers With Good Credit

President Joe Biden / Getty Images
May 1, 2023

More than 30 officials from 27 states are demanding the Biden administration end its mortgage redistribution program that makes borrowers with good credit scores pay more to subsidize loans for borrowers with poor credit.

"The policy will take money away from the people who played by the rules and did things right—including millions of hardworking, middle-class Americans who built a good credit score," the state officials said in a letter to President Joe Biden


The policy goes into effect Monday and will increase monthly mortgage payments for borrowers with good credit scores. The program is run by the Federal Housing Finance Agency, which will use the revenue from higher fees to lower the monthly mortgage cost for borrowers with poor credit. The Washington Free Beacon described how the policy will work in a report last week:

Riskier borrowers with low credit scores or income pay more each month for their mortgage. These borrowers will still pay more after May 1 but much less than they paid before. In order to compensate for that lost revenue, borrowers with strong credit will see their monthly increase to roughly $40 a month on a $400,000 mortgage. That’s an extra $14,400 over the course of a standard 30-year mortgage.

"It is already clear that this new policy will be a disaster," the state officials said. "It amounts to a middle-class tax hike that will unfairly cost American families millions upon millions of dollars."

"We urge you to take immediate action to end this unconscionable policy," the letter concluded.

Former Federal Housing Finance Agency director Mark Calabria said the new policy appears to be an attempt by the Biden administration to subsidize minorities without falling foul of federal law against racial discrimination.

"The Biden administration is definitely trying to create more of a cross subsidy between good credit and bad credit, that’s the intent," Calabria told the Free Beacon. "They are essentially trying to discriminate by race within the legal rules they have and minorities tend to have lower credit scores."

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