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Financial Services Law Insights and Observations

CFPB releases RFI on mortgage closing costs

Federal Issues CFPB Agency Rule-Making & Guidance Mortgages Fees RFI

Federal Issues

On May 30, the CFPB announced a request for information (RFI) regarding mortgage “junk fees” and their impact on borrowers and lenders. The CFPB identified an increase of over 36 percent in median total loan costs for home mortgages from 2021 to 2023 in its analysis, with median mortgage closing costs of $6,000 in 2022. The Bureau argued these fees and costs, many of which are fixed, can reduce home equity and may undercut home ownership.

The RFI requested public input on whether the fees are subject to competition, how fees are set, who profits from them, and how fee changes, if any, impact consumers and the mortgage market. The CFPB was particularly interested in the factors driving fee increases, such as hard-pull tri-merge credit report costs, and how such fees are affecting housing affordability and access to homeownership. The CFPB also highlighted the potential impact of title insurance and mortgage origination fees.

The RFI included nine specific questions related to

(i) whether there are fees that are particularly problematic or burdensome for consumers;

(ii) whether there are unnecessary fees charged for loan closure;

(iii) whether and to what extent consumers compare closing costs across lenders;

(iv) whether and to what extent consumers shop for closing costs across settlement providers;

(v) the determination of fees, the beneficiaries, and lenders’ influence over third-party costs;

(vi) which fees have increased, and what are their causes;

(vii) factors contributing to rising closing, credit report, and credit score costs, the roles of various entities in the credit report chain, competitive pressures on these costs, and their consumer impact;

(viii) lenders’ ability to negotiate closing costs more effectively than consumers; and

(ix) the potential impact of closing costs on housing affordability, homeownership access, or home equity.

Comments in response to the RFI must be received by August 2.