On May 30^th of this year, the Consumer Financial Protection Bureau (CFPB) issued a request for information (RFI) seeking input to understand why closing costs are increasing, who is benefiting, and how costs for borrowers and lenders could be lowered.

The bureau cited cost for credit scores, credit reports and employment verification as examples as well as lender’s title insurance, noting that “title insurance is one of the costliest settlement services at closing.”

Specifically, the CFPB sought information on such issues as how fees are currently set, which closing costs have increased the most over the past few years, fees charged not be necessary to closing, any studies measuring the impact of closing costs on housing affordability, and any data on the degree to which consumers compare closing costs across lenders.

American Land Title Association (ALTA) responded to the CFPB’s public inquiry into mortgage closing costs on August 2 by explaining that the services provided by title professionals and the ongoing protection of a title insurance policy are some of the most essential, but least expensive, parts of the home buying process.

In fact, Diane Tomb, ALTA’s chief executive officer, noted that in a period of increased inflation, thanks to industry innovation, the cost of title insurance coverage has decreased 5% over the last five years alone.

Additionally, under the TILA-RESPA Integrated Disclosure (TRID) rule that the CFPB developed in 2015, fees for title insurance and other closing costs must be provided and disclosed to consumers. The CFPB’s own research from 2020 shows these disclosures are working to educate consumers about closing costs. The bureau’s report praised its own rule for improving “consumers ability to locate key information, compare terms and costs between initial disclosures and final disclosures, and compare terms and costs across mortgage offers.”

ALTA shared with the bureau that the title industry does more than just issue insurance policies. The industry performs vital work to cure defects in the chain of title and collects $3 billion annually in delinquent federal income taxes ($2.4 billion), delinquent property taxes ($600 million) and unpaid child support ($55 million). The industry also helps combat wire and deed fraud to protect consumers.

Additionally, title insurance is comprehensively regulated at the state level by departments of insurance. Title insurance companies are required to file their policies and rates with state regulators to ensure they are fair, non-discriminatory, and adequately protect consumers. Insurers must justify their rates using actuarially supported data. Of course, we support the effort to make homeownership more affordable and accessible for all.

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This material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. This material is not intended to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice.

About Bobbi Pronin
Bobbi Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

Bobbi is not an employee of Anywhere Integrated Services or affiliated with its title companies.