In his effort to impart more “social justice” into the homeownership market, President Biden has implemented a new policy which penalizes home buyers with good credit and rewards those with bad or less than good credit. This makes no sense, of course.

The overall impact of Mr. Biden’s latest scheme is to increase the cost of credit for those with good credit and lower the cost of credit for those with bad credit. Here’s how it’s supposed to work.

The Federal Housing Finance Agency just announced it will change the loan-level pricing adjustment fee on homebuyers. A loan-level pricing adjustment (LLPA) fee is a fee that is charged to mortgage borrowers who use a conventional mortgage, and the fee is based on the borrower’s level of risk.

The LLPA fee can vary depending on factors such as the borrower’s loan-to-value (LTV) ratio, credit score, type of occupancy and the number of units in the property. Typically, borrowers pay LLPAs in the form of higher mortgage interest rates and or fees.

The Federal Housing Finance Agency recently announced it will hike the loan-level pricing adjustment fee on homebuyers with high credit scores and redistribute those funds to borrowers with low credit scores. 

That’s not an insignificant change.

The Commerce Department reported last week that the US economy grew at an annual rate of 1.1% in the first quarter, which was below the pre-report expectation of 2%. While the report was below the pre-report consensus, it was still solidly positive.

The 1Q expansion followed a strong 4Q in which GDP climbed 2.6%, to end a year that saw a 2.1% overall increase in the economy. The latest report showed that consumer spending, the main driver of the economy, rose by a solid 4.2% in the 1Q, but other factors caused the final reading to be below that level.

Most forecasters continue to predict a recession in the second half of this year. But for that to happen, we’ll have to see a marked drop-off in consumer spending. And currently, there are few signs of that happening. We’ll have to see what happens, of course, but I see no reason to assume a recession is inevitable later this year.

Over the last couple of years, there has been increasing talk of the US dollar losing its status as the world’s “reserve currency.” The truth is, this is nothing new. For as long as I can remember, there has been speculation that the US dollar could lose its status as the world’s reserve currency.

The fact is, the US dollar has strengthened as the world’s reserve currency over the last decade, and arguments that it will lose its reserve currency status in the next few years are simply unfounded.

The United States Treasury will exhaust its emergency measures to prevent a debt default sometime between July and September unless Congress raises the $31.4 trillion debt limit, the Congressional Budget Office projected Wednesday.

The latest projection notes that the final date will be determined by tax revenues the IRS receives in April. Should those revenues decline significantly from CBO’s estimates, “the extraordinary measures could be exhausted sooner, and Treasury could run out of funds before July,” CBO director Phillip Swagel said in a statement last week.

The CBO also revised its projection for the size of the annual federal budget deficit over the next decade. The agency now believes the deficit will total $18.8 trillion over the next 10 years, a figure that is 20% higher than the agency’s estimate last May of $15.7 trillion.