The Unfairness of Being Fair - Random Reasonings

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The Unfairness of Being Fair

When growing up, and even as adults, most of us have often been told that life isn’t fair.

All of us eventually are on the unfair end of actions and decisions by others.

Seems to me, however, that the amount of unfairness in our world is increasing at a really fast pace.

Unfairness lurks in every aspect of our lives. From things like pay discrepancies on the job to the really serious stuff like double standards in our justice,  to racial, religious, age, and lifestyle discrimination practices. Unfairness is at the heart of the lies deliberately posted on social media. There is unfairness in privileges derived from extreme wealth and positions of power.

One thing I do know about fairness is that it does not mean that others should work to provide for me so that I can slack off. And it certainly shouldn’t mean that I can be forced to give what I have worked hard to earn to someone else who has less, just because they have less and I have more.

As of May 1st our government has started doing just that. The Federal Government has a new mandate being imposed on home-buyers in the U.S. It was implemented by an Executive Order signed this spring by President Biden.

It’s a revamp of federal rules on mortgage fees for the benefit of the government’s Fannie Mae and Freddie Mac mortgage programs. This revamp is known as an LLPA, or a Loan Level Price Adjustment. It is the ultimate in unfairness.

What the program mandates is that home buyers negotiating a mortgage who have good credit – defined as a credit score of 650 or higher – will be charged an added monthly fee to every mortgage payment they make. That fee will then get paid back to the government’s Fannie Mae and Freddie Mac programs to help pay for mortgages taken out by risky home buyers with bad credit.

Why should a person who watches their credit, pays their bills on time, lives within their means, be forced by the government to help pay off mortgages for people who have over-borrowed so they can live above their means in homes they can’t afford?

As of now the government is claiming the average fee put on the mortgage payment of a good credit borrower would be $40 a month. If that borrower took out a 30 year mortgage, that means by the time his/her mortgage was paid off their house would cost them $14,400 more because of this program!

And there’s no scale applied to this. A home buyer with an annual income of $100,000 pays the same fee as a home buyer with a $10 million annual income.

The number of homes purchased in 2021 was 7 million. 1.4 million of those were financed by Fannie Mae and Freddie Mac government loans. 5.6 million were standard mortgages, the same as the ones now to be charged an additional $40 per month.

Based on those numbers that’s $224 Million each month going into the federal government’s housing loan program paid by citizens who are not using that program or receiving any benefits from it. It’s $2.7 billion a year!

This is easy money for the government. So it makes me wonder if they get away with this, what’s next?

Added fees on car payments for those with good credit to help make the car payments for people with bad credit so they can afford nicer cars?  That would help the auto industry.

Or will people with good credit be charged more interest on their credit cards to pay off the credit card debt for those who can’t make their payments? That would help the banking industry.

Once the precedent is set, there is no stopping it. The government has already shown it considers the auto and banking industries to be “too big to fail” by bailing them out – something done by both democrats and republicans.

Even David Stephens, who was the Federal Housing Administration Commissioner under President Obama said about this new fee “It’s unprecedented. My email is full from mortgage companies and CEO’s telling me how shocked they are by this move.”

The bottom line is, either you can afford to buy a house or not. You may have to settle for a cheaper house than you want but you buy to live within your means. Have we forgotten the economic meltdown of 2008 and 2009 caused by the subprime mortgage crisis where the government created loose lending policies that put people into homes they couldn’t possibly afford?

That real estate bubble burst and lots of people were left with homes far lower in value than the price paid when the mortgages were taken out and many of those homes went into foreclosure.

 It used to be that having a good credit score was a good thing. Now its being used to punish those who keep good credit. This new “fairness” mandate of taking from the “haves” to give to the “have nots”, has got to be stopped. This is nothing to do with the ultra wealthy billionaires. This program is targeted at middle and upper middle income citizens. It’s a huge penalty for the average middle class home buyer.

We all know our elected officials are constantly looking for new sources of revenue from taxpayers. If this door is opened, there is no stopping where the path through it will lead.

“If you still believe in fairness then you’ve lived a very lucky life.” 

–  Leigh Bardugo

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  1. Just watched, “The Big Short” movie. Makes me sick. Nothing appears to have changed. I’m no economist, but am quite sure if you and I ran our household budgets like manner to the Federal Government manages theirs, we’d be in jail.

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