CFPB Issues RFI on Mortgage Closing Costs

The CFPB issued a Request for Information seeking public comment on issues related to the fees charged in connection with mortgages and related settlement services.

The CFPB’s request notes that mortgage closing costs have risen significantly over the last few years, which can contribute to a lack of access to credit and decreased home affordability.  The request also recognizes that lenders are impacted by these rising costs, as in many cases they must either pass them on to consumers or else pay the costs themselves at the expense of their own bottom lines.  Either option creates difficulties in the current mortgage market where, as acknowledged by the CFPB, mortgage originators are already facing financial challenges.

Among other things, the Request for Information also called out title insurance as “one of the costliest settlement services at closing.”  The CFPB noted concerns that borrowers are required to pay for the lender’s title insurance and need to separately purchase an owner’s policy in order to cover any of their own losses not covered by the lender’s title policy.

The CFPB is seeking comments from the public, industry participants, and other interested stakeholders on the impact closing costs have on borrowers and the mortgage market.  The request lists a number of questions and topics on which the agency is particularly interested, including:

• Specific fees that are concerning or cause hardships for consumers;

• Fees that are not or should not be necessary to close a loan;

• The extent to which consumers compare closing costs or shop around for lenders and settlement providers;

• How fees are set;

• Causes for the increase in closing costs over the last few years, including for credit reports and credit scores; and

• Any studies or data that measure the impact closing costs have on overall costs, housing affordability, access to homeownership, or home equity.

Comments must be submitted to the agency by August 2, 2024.