“Junk fees and excessive closing costs can drain down payments and push up monthly mortgage costs,” said CFPB Director Rohit Chopra. “The CFPB is looking for ways to reduce anticompetitive fees that harm both homebuyers and lenders.”
The Consumer Financial Protection Bureau (CFPB) says in a press release that rising fees are draining down payments and pushing homeownership out of reach! As a result, the CFPB is launching a public investigation into rising mortgage closing costs. The agency aims to understand the cause of the increase, who benefits from it, and how to lower costs for both borrowers and lenders.
Sharp Increase in Closing Costs
According to the CFPB's analysis, closing costs have skyrocketed recently. From 2021 to 2023, the median total cost of a home mortgage loan increased by over 36%. These unavoidable fees can significantly impact household budgets and a family's ability to save for a down payment.
Impact on Borrowers and Lenders
High closing costs burden borrowers and limit lenders' ability to compete. Lenders either absorb these costs or pass them on to borrowers, hindering competition and access to affordable mortgages.
CFPB Seeks Public Input
The CFPB seeks information from borrowers, lenders, and the public to understand how closing costs are inflated and how they restrict the mortgage market. They're particularly interested in:
Competition: How much competition exists for closing cost services (credit reports, title insurance)? What factors limit this competition?
Fee Structure and Profits: Who profits from these required services? Do lenders have control over third-party fees passed onto borrowers?
Cost Increases and Consumer Impact: Which closing costs have increased the most? Why? How do these rising costs affect housing affordability, homeownership, and home equity?
How to Participate
The CFPB encourages everyone to submit comments and data within 60 days of publishing the request. Their findings will be used to develop regulations, guidance, and other initiatives to address these issues.
Learn More and Submit a Complaint
You can find more details about the CFPB's investigation https://www.consumerfinance.gov/consumer-tools/mortgages/. Consumers can submit complaints about financial products or services through the CFPB's website or by calling (855) 411-CFPB (2372).
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(C) 2024 Jeff Sorg
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