Dozens of state financial officers urge Biden to end mortgage policy giving risky buyers discounts

State financial officials are urging the Biden administration to end a policy that they say makes it more difficult for people with good credit to buy homes while subsidizing better mortgage rates for higher-risk borrowers. 

"It is already clear that this new policy will be a disaster. It amounts to a middle-class tax hike that will unfairly cost American families millions upon millions of dollars," 34 state financial officers from 27 states said in a letter Monday to President Joe Biden and Federal Housing Finance Agency Director Sandra Thompson.

The administration says that the policy, which went into effect Monday, includes "updated fees," but, "They do not represent pure decreases for high-risk borrowers or pure increases for low-risk borrowers. Many borrowers with high credit scores or large down payments will see their fees decrease or remain flat."

The state officials – including treasurers, auditors, commissioners and chief financial officers – said in the letter that "those who make down payments of 20 percent or more on their homes will pay the highest fees."

Part of the policy dealing with updated pricing will not go into effect until August.

"Federal programs exist to address affordable housing assistance and the new policy does nothing to address the shortage of housing inventory," the state officials also said in their letter. "But the right way to solve that problem is not to use the power of the federal government to penalize hardworking, middle-class American families by confiscating their money and using it as a handout."

Madeleine Hubbard is an international correspondent for Just the News. Follow her on Twitter or Instagram.