Settlement service fees for mortgage originations haven't budged much since new Real Estate Settlement Procedures Act policies took effect at the beginning of the year, according to a new study.
Ernst Publishing Co. conducted a survey of 226 lenders from Oct. 11-16 to gauge price ranges in county recording fees and vendor- and lender-controlled origination fees.
According to the survey, 57.5% of respondents said county recording fees increased 5% or less during the past 12 months. Like the low increase in recording fees, 55.7% of respondents said vendor-controlled fees like appraisals, credit checks and title searches increased no more than 5%. In addition, 51.4% reported lender-controlled fees didn't increase more than 5%.
Those responses contradicts a common misconception that the new good faith estimate led to higher costs for borrowers, Jan Dalton Clark, vice president of the Half Moon Bay, Calif.-based firm, told National Mortgage News.
"We heard outcry from our lender clients that the perception is that they have increased fees because of RESPA and borrowers are paying the price," Clark said.
In reality, she said, the estimates on the GFE are now more accurate. Previously, lenders used baseline prices that generally underestimated fees. RESPA holds lenders accountable for cure violations between the GFE and HUD-1 closing document and the lender must reconcile any settlement services that cost more than 10% of the price quoted on the GFE.
"Before the new RESPA regulations, borrowers would go to the closing table and find out they had $2,000 in charges that weren't quoted correctly that they had to pay," Clark said. "What we're seeing now is that the fees are accurate on the GFE." (For the full story see the upcoming paper edition of National Mortgage News.)
