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The Consumer Financial Protection Bureau said Thursday it wants to understand why mortgage closing costs are rising, who benefits and how to lower costs for borrowers and lenders.
To get those answers, regulators have launched Public inquiry into junk fees that add to mortgage closing costs. These costs can harm household budgets and consumers’ ability to afford a down payment. Regulators say it could also limit lenders’ ability to offer competitive mortgages.
The CFPB said the median total loan cost for a home mortgage rose more than 36% from 2021 to 2023. “Garbage fees and excessive closing costs can reduce payments and drive up monthly mortgage costs,” said CFPB Director Rohit Chopra. “The CFPB is looking for ways to reduce anti-competitive fees that harm both homebuyers and lenders. ”
Buying a home with a mortgage comes with significant fees, such as credit report and title insurance fees. Even with disclosure, borrowers are forced to pay fees and may not have the ability to shop around for better options. The CFPB says that by 2022, the median closing cost will be $6,000.
The regulator is seeking input from the public, including borrowers and lenders, on the following topics:
- Which fees are considered competitive fees;
- How fees are set and who profits from them; and
- How fees are changing and how they affect consumers.
The comment period is 60 days from the date the request is published in the Federal Register.
Mortgage lender stocks are in the green in early trading Thursday, as are title insurance names: Rocket Companies (NYSE:RKT) +3.0%UWM Holdings (NYSE:UWMC) +1.4%loan warehouse (NYSE:LDI) +2.6%, PennyMac Financial Services (NYSE:PFSI) +2.1%Old Republic International (NYSE: ORI) +1.6%First American Financial (NYSE: FAF) +1.4%Stewart Information Services (NYSE: STC) +0.5%Fidelity National Financial (NYSE:FNF) +1.5%.
