Maryland Legal Alert for Financial Services
CFPB Requests Public Comment on Mortgage Closing Costs
On March 8, 2024, the Consumer Financial Protection Bureau (CFPB) asked for public comment on mortgage closing costs, which include title insurance, origination fees, and appraisal costs. As part of the CFPB’s mission to eliminate “junk fees,” the CFPB is now targeting fees that consumers incur when closing on residential property. The CFPB noted the large increase in median total loan costs and frequent use of discount points as the cause for concern over mortgage closing costs, but failed to connect these metrics to rising interest rates. The CFPB also noted that many closing costs are fixed and do not vary by the mortgage size, meaning low-income borrowers pay the same fees as those getting much larger loans. The high closing costs may come from a lack of choice and competition among lenders, which the CFPB vows to improve by implementing additional rules and guidance. While the residential mortgage market is already highly regulated, the CFPB seems poised to introduce more rules, adding complexity in its pursuit of consumer protection.
For more information, contact Christopher R. Rahl or Natalie C. Gibson.