Borrowers with good credit shouldn't have to shoulder affordable housing costs
Plus: States that don’t comply with transparency laws; the need for more and better workforce training; and considering the connection between race and poverty
Will changes to credit-based mortgage fees help low-income borrowers? A Federal Housing Finance Agency (FHFA) change to risk-adjusted mortgage fees made news last week when outlets including The Wall Street Journal sounded an alarm about the policy, claiming it will “raise mortgage fees for borrowers with good credit to subsidize higher-risk borrowers.” The rule, which goes into effect on May 1, is meant to make housing more affordable but, as FREOPP Research Fellow Roger Valdez argues in The Washington Times, qualifying people who cannot pay back loans doesn’t help the hard-working, low-income families who save for a down payment or those who pay their bills on time. Instead, it fosters resentment among the people who followed the rules while increasing systemic risk and inflating demand—and prices—for housing at the lower end of the market. FHFA should be cautious about changing its policy and should emphasize adjustments that expand opportunity, without putting a thumb on the scale.
What if parents knew how public schools are performing? In the wake of historic learning losses following pandemic school closures—especially among disadvantaged students—both parents and lawmakers want to assess how well public schools are serving children. Unfortunately, despite federal laws requiring states to test students annually and report results to the public, FREOPP Senior Fellow Dan Lipps found that many states aren’t following federal guidelines or reporting information in a timely manner. This means the vast majority of states are denying the public a vital means to understand how public schools are performing. Congress has tasked the Department of Education with investigating states that aren’t following the law, an important step toward providing parents the kind of transparency they need to choose the right school for their children.
How America neglects workforce training—and how to do better: Although there are more than ten million job openings in the U.S., a majority of Americans no longer feel that a college degree will be worth the cost when it comes to teaching the skills needed to do them. A well-run workforce training program would be a welcome solution for hundreds of thousands of students, especially those of modest means. But, as FREOPP Senior Fellow Preston Cooper describes in Forbes, the government’s current approach to funding and approving these programs imposes too many burdens on applicants for too little benefit, especially compared to the billions of dollars and entitlement-like approach it takes to funding traditional higher education. The solution? Level the playing field for all postsecondary education options and streamline existing workforce training programs to provide workers with quick, accessible, work-based skills that prepare them for the jobs of tomorrow.
The Inclusive Economy on poverty and race: FREOPP Senior Fellow Michael Tanner’s 2018 book, The Inclusive Economy: How to Bring Wealth to America’s Poor, highlights many themes that are central to FREOPP’s mission, including criminal justice reform, greater educational freedom, and housing deregulation. On FREOPP.org, he excerpts key passages, grappling with the structural barriers to expanding opportunity to those who least have it and the ways in which government policies have made those it aims to help worse off. His latest update examines the link between poverty and race, including the enduring and haunting legacy of slavery and racial discrimination.
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