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Do you believe the previous rates were simultaneously too low for good credit and too high for bad credit with respect to the risk of defaulting? Do you believe

Do you believe the previous rates were simultaneously too low for good credit and too high for bad credit with respect to the risk of defaulting? Do you believe the new rates are nothing more than trying to better model the risk? If not then please be precise. Being monotonic means little. Why is it “sensible”?

mindslight 3y ago
I mean, that's exactly what my original comment said. Those adjustments are right in line with what you'd expect from a simple reduction of credit scores as a predictor. And given how often faith tends to be overextended to centralizing financial models, I'd say doing so is more likely in the right direction than not. I haven't read any other discussion of the change other than this horrible article, and I'm not going to seek it out because the answer to culture war bullshit isn't to fill your head with both types of poor takes and try to somehow average them.
- searealist 3y ago
  > Those adjustments are right in line with what you'd expect from a simple reduction of credit scores as a predictor. It doesn't follow that pattern at all. Take a look at the heat map here: https://www.mortgagenewsdaily.com/news/01192023-big-llpa-changes https://www.mortgagenewsdaily.com/news/01192023-big-llpa-cha... Previously the rates were based on risk. The new rates are engineered to make it cheaper to get into homes with less money down (of all credit scores) or poor credit. It's subsidized by charging higher rates to people with good credit scores who put more money down. Oh, and straight from the horses mouth: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Equitable-Housing-Finance-Plans--for-Fannie-Mae-and-Freddie-Mac.aspx https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announce... > “The Equitable Housing Finance Plans represent a commitment to sustainable approaches that will meaningfully address the racial and ethnic disparities in homeownership and wealth that have persisted for generations," said FHFA Acting Director Sandra L. Thompson. “We look forward to working with the Enterprises, lenders, and other housing industry participants to further develop the ideas described in these plans."
  - mindslight 3y ago
    I've looked at the "heat map" and I don't see anything that's inconsistent with a reasoned adjustment still based on risk, deemphasizing credit scores. There's an explanation that the 760+ and 780+ bands are new, so a drastic increase in the previously highest band makes a lot of sense. Also if I'm reading that article right, this is actually one time fee. So Reason is completely handwaving it into a monthly fee to conjure large numbers, making the Reason article even worse than it first seemed. Statements by political bureaucrats being in the language of their party aren't indicative of much. It's the same culture war gobbledygook as the Reason article, just a different flavor.
    - searealist 3y ago
      It is deemphasizing down payment more than credit score, but only for people with good credit. They are literally telling they world why they made these changes and you are criticizing Reason for taking them at face value. It's an increase in a 1 time fee rolled into the loan which equates to an increase in the month to month mortgage which is constant. It's perfectly honest to state it how they did.

mindslight 3y ago

I mean, that's exactly what my original comment said. Those adjustments are right in line with what you'd expect from a simple reduction of credit scores as a predictor. And given how often faith tends to be overextended to centralizing financial models, I'd say doing so is more likely in the right direction than not. I haven't read any other discussion of the change other than this horrible article, and I'm not going to seek it out because the answer to culture war bullshit isn't to fill your head with both types of poor takes and try to somehow average them.

searealist 3y ago
> Those adjustments are right in line with what you'd expect from a simple reduction of credit scores as a predictor. It doesn't follow that pattern at all. Take a look at the heat map here: https://www.mortgagenewsdaily.com/news/01192023-big-llpa-changes https://www.mortgagenewsdaily.com/news/01192023-big-llpa-cha... Previously the rates were based on risk. The new rates are engineered to make it cheaper to get into homes with less money down (of all credit scores) or poor credit. It's subsidized by charging higher rates to people with good credit scores who put more money down. Oh, and straight from the horses mouth: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Equitable-Housing-Finance-Plans--for-Fannie-Mae-and-Freddie-Mac.aspx https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announce... > “The Equitable Housing Finance Plans represent a commitment to sustainable approaches that will meaningfully address the racial and ethnic disparities in homeownership and wealth that have persisted for generations," said FHFA Acting Director Sandra L. Thompson. “We look forward to working with the Enterprises, lenders, and other housing industry participants to further develop the ideas described in these plans."
- mindslight 3y ago
  I've looked at the "heat map" and I don't see anything that's inconsistent with a reasoned adjustment still based on risk, deemphasizing credit scores. There's an explanation that the 760+ and 780+ bands are new, so a drastic increase in the previously highest band makes a lot of sense. Also if I'm reading that article right, this is actually one time fee. So Reason is completely handwaving it into a monthly fee to conjure large numbers, making the Reason article even worse than it first seemed. Statements by political bureaucrats being in the language of their party aren't indicative of much. It's the same culture war gobbledygook as the Reason article, just a different flavor.
  - searealist 3y ago
    It is deemphasizing down payment more than credit score, but only for people with good credit. They are literally telling they world why they made these changes and you are criticizing Reason for taking them at face value. It's an increase in a 1 time fee rolled into the loan which equates to an increase in the month to month mortgage which is constant. It's perfectly honest to state it how they did.