Connect with us

Hi, what are you looking for?

WORLD NEWS

US Considers Prohibition on Lenders Charging Homebuyers for Title Insurance

Mortgage demand drops to 27-year low as interest rates pull back

US Considers Prohibition on Lenders Charging Homebuyers for Title Insurance

The Consumer Financial Protection Bureau (CFPB) is contemplating a potential prohibition on mortgage bankers charging homebuyers for title insurance that primarily safeguards lenders. This move marks a departure from a longstanding industry norm.

Sources familiar with the matter indicate that the Consumer Financial Protection Bureau’s (CFPB) plan is still in its early stages. The bureau intends to kickstart this initiative by issuing a comprehensive request for information on closing costs, which includes title insurance and associated fees. This request is slated for release as early as this month, according to Bloomberg. However, a final proposal regarding closing costs, including title insurance, is not expected until next year, as confirmed by one of the sources.

The potential implementation of this initiative, if approved, could offer relief to prospective homebuyers grappling with challenges such as limited inventory, soaring prices, escalating closing costs, and a series of interest-rate hikes since 2022. Mortgage lenders and title insurers, currently navigating a housing slowdown, are likely to oppose such a measure.

ALSO READ: Cyber Insurance Trends Reshaping Cybersecurity Market Dynamics as Companies Gain Industry Influence

Maria Vullo, former superintendent of New York’s Department of Financial Services, expressed support for reducing homeowners’ closing costs, provided that lenders cannot shift these costs to homebuyers through alternative fees or higher interest rates. She emphasized that a title insurance policy primarily protects the lender’s interest, and it would be favorable for lenders to bear this cost themselves.

Advertisement. Scroll to continue reading.

Recently, the CFPB also flagged concerns about the rising trend of homebuyers paying “discount points,” highlighting potential risks for consumers. The regulator noted a doubling in the percentage of homebuyers paying discount points from 2021 to 2023, especially among those with lower credit scores. CFPB Director Rohit Chopra underscored that higher interest rates have prompted buyers to pay upfront fees to reduce their interest payments, indicating uncertainty about future refinancing opportunities.

Meanwhile, research conducted by PYMNTS Intelligence and PSCU revealed that consumers are actively seeking better deals on mortgages and other credit products. Factors like interest rates and payment terms significantly influence consumers’ choice of financial institutions, often prompting them to switch to institutions offering superior offerings, as highlighted in the study “How Credit Product Rates Impact FI Selection.”

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Catch More Updates Below

WORLD NEWS

US agrees to pull troops out of Niger All US soldiers are set to leave Niger, ending their role in the fight against Islamist...

BUSINESS NEWS

 RBZ Considers Cryptocurrency Amid Currency Challenges The Reserve Bank of Zimbabwe (RBZ) has disclosed that cryptocurrency was among the options considered to address the...

WORLD NEWS

US to Decide on TikTok Crackdown; Threatens Ban The U.S. House of Representatives plans to vote on a bill on Wednesday that would give...

LOCAL NEWS

US Ends Zimbabwe Sanctions, Targets Mnangagwa and Allies for Alleged Corruption and Human Rights Abuses The United States announced on Monday the termination of...

LOCAL NEWS

AFRICAN leaders last week took the anti-sanctions crusade to the United States, unequivocally telling Washington to unconditionally remove the illegal embargo which continues to...

Advertisement
error: Content is protected !!