V.I.P Mortgage

Capital Commentary
- by Kirk Willison
kwillison@archmi.com
www.archmi.com
Direct 202-714-8606

Lucky families and individuals who find a home to purchase are discovering it costs more than in the past to close the loan.

• Politicians, regulators and housing policy influencers are noticing, too.
   
• The White House is expected to soon announce a roundtable to investigate ways to reduce homeownership costs.
   

This issue of Capital Commentary examines soaring origination and closing fees. Do they fit the definition of "junk fees"?

1-Big Thing: Origination, Closing Costs in the Crosshairs

The Biden administration is expanding its crackdown on "junk fees" by taking aim at mortgage closing costs, setting up a showdown with mortgage lenders and service providers.

The big picture: The administration previously announced plans to target excessive online concert fees, hotel resort fees and credit card late fees. Now, housing finance is feeling the heat.

• President Biden used his State of the Union address to announce the steps, including one that will permit Fannie Mae and Freddie Mac to waive title fees on certain refinance loans.
   
• The Consumer Financial Protection Bureau (CFPB) is nearing release of a Request for Information from the public about ways to reduce origination fees for borrowers.
   

Why it matters: Home loan closing costs increased nearly 22% for purchases between 2021 and 2022, with the average hitting $6,000, according to the CFPB.

• Borrowers with smaller loans are disproportionately impacted because many closing costs are fixed.

Driving the news: The CFPB has signaled plans to issue new rules and guidance to "improve competition, choice, and affordability" when it comes to closing costs on home loans.

• Refinance closing costs surged 49% to an average $4,979.
   
• Credit report charges, title insurance premiums, and discount fees are high-profile targets.
   

The administration's view: Biden officials argue some mortgage fees "benefit the lender but not the borrower" and drive up costs, reducing home affordability.  

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