{"id":4184,"date":"2024-06-14T07:05:20","date_gmt":"2024-06-14T11:05:20","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=4184"},"modified":"2024-06-16T09:56:47","modified_gmt":"2024-06-16T13:56:47","slug":"out-of-control-title-insurance-and-other-extras-home-buyers-pay","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/out-of-control-title-insurance-and-other-extras-home-buyers-pay\/","title":{"rendered":"Out of Control: Title Insurance and Other \u201cExtras\u201d Home Buyers Pay"},"content":{"rendered":"\n
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$18K annually. That\u2019s what the average homeowner pays to be one \u2014 above and beyond the price of the home and mortgage, property taxes, and utilities. Mortgage closing costs make up a third of that figure.<\/p>\n\n\n\n

U.S. housing costs are outpacing the country\u2019s overall inflation. Homeowners\u2019 insurance alone is up 11% year over year. And then there\u2019s the need to pay for title insurance, to protect home deeds not just for the deed holders themselves \u2014 but also for the banks.<\/p>\n\n\n\n

All these extras are important for new buyers to anticipate. The Biden administration has repeatedly attempted to press these costs down, calling some of the extra closing charges \u201cjunk fees.\u201d And the Consumer Financial Protection Bureau, too, has called out<\/a> the \u201cjunk fees\u2026driving up housing costs.\u201d<\/p>\n\n\n\n

Lender\u2019s Title Insurance: A Junk Fee?<\/h2>\n\n\n\n
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Whether we\u2019re buying or refinancing, closing is a whirlwind. Fees and extras can go unexamined, simply because a mortgage borrower doesn\u2019t spot them. Paying for title insurance that covers the lender, not the buyer, is one example.<\/p>\n\n\n\n

The Biden Administration is bringing back its abandoned pilot program<\/a> to let homeowners out of purchasing lender\u2019s title insurance on certain home refinances. The mortgage industry resents the term \u201cjunk fees<\/a>\u201d as applied to lender\u2019s title insurance. But federal regulators are right about title insurance as an extra burden for loan applicants.<\/p>\n\n\n\n

According to Diane Tomb at the industry publication HousingWire<\/em>, the Biden administration is out to reassign responsibility to Freddie Mac and Fannie Mae for dealing with title claims when homes are refinanced. That\u2019s something Freddie and Fannie are not equipped to handle, says Tomb.<\/p>\n\n\n\n

When a homeowner refinances, that new loan needs title insurance, just as the homeowner\u2019s first mortgage did. This can\u2019t be taken lightly, Tomb insists. Lenders have to protect their collateral. If something slips through the cracks, a prior mortgage lien could inadvertently be left on a home. It would be up to some yet-unknown departments at Freddie Mac or Fannie Mae to investigate and resolve any possible \u201crefinance fraud.\u201d Deed holders, Tomb suggests, would be left holding the bag.<\/p>\n\n\n\n

Tomb goes so far as to say: \u201cThe 2008 financial crisis happened the last time these entities took on significant risk for which they were ill-equipped to handle.\u201d<\/p>\n\n\n\n

But is backing the insurance for a home title that\u2019s only being re-<\/em>financed that hard to handle? The administration\u2019s point is that paying \u2014 repeatedly \u2014 to insure the lending institutions amounts to an unfair burden on deed holders.<\/p>\n\n\n\n

What Other Fees Are Under Scrutiny?<\/h2>\n\n\n\n

The Consumer Financial Protection Bureau is on a roll, investigating consumer experiences with charges that “far exceed the marginal cost of the service they purport to cover.” The agency\u2019s focus, say the experts at the Morgan Lewis law firm, is on unfair, deceptive, or abusive acts and practices (UDAAPs).<\/p>\n\n\n\n

Under special scrutiny are certain services for which charges have shot up in recent years.<\/p>\n\n\n\n

The legal experts do expect new regulations on mortgage closing fees. For a few examples, look for the government to target:<\/p>\n\n\n\n