Quote Originally Posted by Alan View Post
As I understand it, Borrower A may or may not pay higher mortgage fees than Borrower B, it will now depend upon a variety of factors such as credit score, loan to value, debt to income and loan purpose, etc., which can change a borrower's basis points by 100 or more.

In a theoretical estimation I saw from a mortgage broker online, someone applying for a $400,000 mortgage with a credit score of 740 and 20% cash down payment would see their fees increase from around $2000 to about $3500. Someone applying for the same mortgage amount with a credit score of 640 and 3% cash down payment would see their fees decrease from around $11,000 to about $6,000. A borrower with a credit rating in the 500's may see their fees decreased even more as there seems to be a matrix involved that scores those borrowers in order to come up with an appropriate fee, although I've not seen it published anywhere.

So, Borrower A wouldn't necessarily pay more in mortgage fees than Borrower B, but would certainly be paying more in order to subsidize Borrower B. It's called a loan level pricing adjustment, but it's historically been better known as Robbing From Peter To Pay Paul.

I enjoy a credit rating in the mid 830's. If I were Borrower A in the theoretical I mentioned, I wonder how much higher my increase might be?
oh I agree that Biden has changed the formula so that more responsible people are now shouldering a bigger percentage
of the loan costs than they paid in the past. I wanted to see if they are paying in actual dollars more now than the less responsible people.

It both theoretical borrowers have exactly the same metrics (same down payment, same loan to value etc) it seems from your explanation that the responsible guy will still pay less, based entirely on his credit score.

Thanks! I do not like this shift of course but what are ya gonna do? It could be worse, those with better credit s ores could be penalized in actual dollars.