The Consumer Financial Protection Bureau today launched a public inquiry into so-called “junk fees” associated with mortgage closing costs to “understand why closing costs are increasing, who is benefiting, and how costs for borrowers and lenders could be lowered.” The bureau also cited its research concluding that borrowers paid a median amount of $6,000 in closing costs as of 2022.
Specifically, the CFPB is seeking public feedback on which fees related to mortgage closing costs are subject to competition; how the fees are set and who profits from them; and how fees are changing and how they affect customers. The findings from the inquiry will inform possible rulemaking, guidance and other policy, according to the bureau. Comments are due within 60 days of the request for comment being published in the Federal Register.
In a joint statement, the American Bankers Association, Housing Policy Council and Mortgage Bankers Association said that a discussion about policies that maintain healthy and competitive mortgage markets makes sense. However, they noted that the CFPB already conducted a formal review and evaluation of its mortgage disclosure rules and praised them for improving borrower understanding and facilitating the ability to shop among lenders. The industry invested considerable resources into implementing those rules, they added.
“If the CFPB is now modifying its previous position and is considering changing this complex regulatory disclosure regime, a rulemaking process governed by the Administrative Procedure Act—and supported by a robust cost-benefit analysis—is the only appropriate vehicle to initiate that work,” the groups said. “Such a rulemaking process would allow for the proper level of engagement to produce changes that benefit consumers and do not add compliance costs and lead to negative unintended consequences.”
