On May 30, the CFPB announced that it was probing mortgage closing costs as part of its continued focus on so-called junk fees. The Bureau's request for information seeks input from the public on "the impact closing costs have on borrowers and the mortgage market, including the degree to which they add overall costs or otherwise cause borrower harm, and any impact such fees may have on the ability to purchase a home, anticipate and afford monthly payments, or refinance an existing mortgage."
The Bureau has noted that closing costs have recently risen sharply, increased by over 36% from 2021 to 2023. According to the Bureau, these costs, along with the rise of home prices and interest rates, have contributed to a lack of access to credit and decreased home affordability.
The CFPB requests that the public submit stories, data, and information about mortgage closing costs. To assist commenters in developing responses, the Bureau crafted questions and topic areas that commenters could use to guide their submissions. These questions and topic areas include:
- Data or evidence on the degree to which consumers compare or shop for closing costs across lenders.
- How fees are set and who benefits or profits from such fees? What oversight do lenders have over those fees and costs?
- How have consumers been harmed by closing costs?
- What is the cause of the increase in closing costs over the past year, including for the cost of credit reports?
- Would lenders be more effective at negotiating closing costs than consumers?
The Bureau has requested comments by August 2, 2024.
Putting into Practice: As predicted, the Bureau is looking hard at issuing regulatory guidance on closing costs. Notably, the residential mortgage market is highly regulated; in 2015 the industry implemented the CFPB's TILA-RESPA Integrated Disclosures (TRID) Rule, which significantly reformed and consolidated mortgage disclosures provided to borrowers. We will stay tuned for continued updates.
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