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CFPB Launches Initiative Targeting 'Junk Fees'

  • 1.  CFPB Launches Initiative Targeting 'Junk Fees'

    Posted 02-07-2022 15:54
    You may have seen that the CFPB launched an initiative to collect information on alleged junk fees that will help shape the agency's rulemaking, guidance and enforcement priorities.

    According to the CFPB, companies are increasingly charging inflated and back-end fees to households and families. This conceals the true price of products from the competitive process, the bureau said in a release. For example, hotels and concert venues advertise rates, only to add "resort fees" and "service fees" after the fact. Much of the focus is on credit card and overdraft fees, but within the eight-page request for information, the CFPB specifically mentions title insurance and closing costs in the section focused on mortgages:

    Mortgages facilitate homeownership for millions of people, and, through homeownership, allow millions of families to build and maintain intergenerational wealth. But priced into most mortgages are thousands of dollars in application fees and closing costs, which few people are well-positioned to shop on. These fees can act as a barrier to homeownership, strip wealth from homeowners accessing their equity through refinancing or home sales, and deter some homeowners from refinancing when doing so would lower total housing costs and be financially advantageous. Advocates and reporters have noted that many closing costs, like title insurance, may not always be subject to standard or appropriate competitive forces.

    Even aside from inflated and padded fees rolled into the mortgage at closing, homeowners can find themselves forced to pay fees for making payments over the phone or online or even for the servicer's bill pay service. Borrowers who face financial hardship and struggle to make mortgage payments can find themselves unable to catch up due to the snowballing of a plethora of fees related to the mortgage delinquency. Monthly property inspection fees, new title fees, legal fees, appraisals and valuations, broker price opinions, force-placed insurance, foreclosure fees, and miscellaneous, unspecified "corporate advances" can all price a homeowner out of a home.



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    Jeremy Yohe
    Vice President
    American Land Title Association
    Washington DC
    +1 (202) 296-3671
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