The Consumer Financial Protection Bureau (CFPB) has begun a public inquiry into mortgage closing costs, claiming that so-called “junk fees” are inflating these costs.
The agency issued a request for information regarding which fees are subject to competition, how fees are set and who profits from them, and how fees are changing and how they affect consumers. The CFPB is also seeking data input on how closing costs affect housing affordability, access to homeownership and home equity.
The CFPB stated the median total loan costs for home mortgages increased by over 36% from 2021 to 2023. In launching its inquiry, the CFPB claimed the closing costs fees can limit both borrowers from gaining access to credit and lenders from being able to offer competitive mortgages.
As part of its inquiry, the CFPB cited credit report costs and title insurance as “junk fees.” However, the CFPB did not cite specific companies as being primary offenders in this issue.
CFPB Director Rohit Chopra opined, “Junk fees and excessive closing costs can drain down payments and push up monthly mortgage costs.” Chopra added that along with the public, “the CFPB is particularly interested in hearing from consumers, industry participants, social services organizations, small business owners, consumer rights and advocacy organizations, legal aid attorneys, academics and researchers, and state and local government officials.”
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If CFPB really knew how the industry worked, they would know that we can’t get away with so-called “junk fees”. It’s ridiculous to think they exist anymore today. The regs. are so strict that any fee out of line is automatically flagged.
Another example of people without the mortgage expertise needed, creating jobs for themselves in an Agency that should not exist.
Agree with previous post.
Agree with OP. This is yet another example of people creating rules and laws who know nothing about the industry they are regulating.
I look forward to reading about your results.
It was always my understanding the borrower would have all itemized closing costs laid out before them with Day 1 Certainty documents. Did they do away with that and not tell anyone? Asking because, I really don’t know. Perhaps someone else can provide the answer.
I would like to know the actual escrow activity which relates to a “Loan Tie-In Fee” which typically ranges from $250.00 to $450.00??? Does it represent sending funding conditions to the lender or contacting title to see if the loan wire has hit?
The CFPB has no clue what they are talking about!!! I am more than happy to explain the industry to them, but you can’t find an individual to speak with at the CFPB. Have them contact me as I am happy to explain what they are missing.
They are citing title insurance as a junk fee? What a joke! I know it’s optional to get title insurance, but I would never advise someone not get title insurance.
My thought exactly.
I have been an active Realtor for almost 50 years and I have never heard of one title insurance claim. Not one. I would like statistics on what the % is of insured loans that historically have involved a title insurance claim. If title insurance is unnecessary, it involves lenders only in so far as they will not make an uninsured loan. Perhaps they should demand title insurance only when and if the title search raises red flags. Or perhaps when there is a history of deeds other than a warranty deed.
This is a very interesting issue that the CFPB has raised! Perhaps long overdue.