Federal government questions rising mortgage closing costs

ATLANTA - The Biden administration said his team would crack down on junk fees. And it has with caps on late credit card fees and insufficient funds fees. Next up is the mortgage fee. The Consumer Financial Protection Bureau claims that closing costs and associated fees have jumped up 36 percent in two years.

The average closing cost when buying a house last year was $6,000. That's above the cost of the home. It doesn't include the realtor's fees. Toss in insurance and the interest rate, and the cost of a home shoots up. But, the folks at the White House believe that closing costs are getting into the junk fee space that it's trying to rein in.  

The Consumer Financial Protection Bureau is starting a public inquiry, which means it's asking tough questions of the industry. 

"Junk fees and excessive closing costs can drain down payments and push up monthly mortgage costs. The CFPB is looking for ways to reduce anticompetitive fees that harm both homebuyers and lenders," CFPB Director Rohit Chopra said.

Look at the numbers the bureau offered. For a home purchase in 2022, the median loan cost was $5954. That's up 21.8 percent from the previous year. Let's look at refinancing. That median cost was $4,979 in 2022, up a whopping 49.3 percent in a year. And finally, from the Bureau, closing cost fees range from $3,472 to $10,416.

For more details on the inquiry and to learn how to voice your opinion, check out the CFPB's page.