CFPB Looking at Mortgage Loan Junk Fees

The CFPB has continued to keep busy with junk fees. We’ve previously seen proposals to limit overdraft fees and, in certain cases, prohibit nonsufficient funds fees. There was also a Final Rule to limit credit card late fees issued not that long ago. Now, it appears the CFPB will be looking at fees charged on mortgage loans, as well. In March, the CFPB issued a blog, Junk fees are driving up housing costs. The CFPB wants to hear from you. The blog indicates that median loan costs on mortgage loans have increased by more than 20% from 2021 to 2022. The CFPB believes these costs …all too often are full of junk fees.

Discount points seem to be of particular interest to the CFPB in that the median amount paid for discount points almost doubled from 2021 to 2022. The CFPB warns that such points may not always save borrowers money.

Another area of concern includes cost increases related to services where there is little to no competition and/or services for which a borrower cannot pick a provider and ultimately does not benefit from the service. Lender’s title insurance is given as an example of a service a borrower must often pay for where the sole benefit goes to the lender. Credit reports were also mentioned as there has been steep increases in costs that are dictated by only a handful of providers.

The blog also touches on the potential fair lending impact. Specifically, since many of these closing costs are fixed amounts, borrowers that seek smaller loan amounts are disproportionately impacted. This includes lower-income borrowers, first-time homebuyers and those in Black and Hispanic communities.

The CFPB plans to continue looking at mortgage closing costs in the coming months and will seek input prior to issuing any rules and/or guidance it finds …necessary…to improve competition, choice, and affordability.

Stay tuned!

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Amy Kudlacek

Amy brings many years of banking and compliance experience to Banker’s Compliance Consulting. She has worked for both large and small financial institutions and spent time working in every area of a bank. She started out as a teller in college and eventually became a branch manager. Her love, however, was always compliance. Amy began her career with Banker’s Compliance Consulting in 2000. Her knowledge and experiences have allowed her to develop a well-rounded and practical approach to regulatory compliance. Amy is CRCM certified, has a Bachelors Degree in Business Administration and is a graduate of the ABA Compliance School. Amy & her husband have two children at home and stay busy following their activities. They spend a lot of time in the bleachers!

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