New Rules Limit Too-Low Estimates of Closing Costs

RISMedia  
August 20, 2010
Reckard, E. Scott

Bankrate.com says closing costs have risen 36 percent in 2010, mainly due to new penalties on mortgage lenders and brokers who lowball good-faith estimates. New HUD rules mean that lenders who underestimate costs must pay the difference, which has translated into more accurate quotes. Additionally, Bankrate says requirements from regulators, Fannie Mae, and Freddie Mac that lenders do more fact-checking also played a role in boosting actual closing costs. Bankrate's survey of online good-faith estimates for $200,000 mortgages reveals a 23 percent year-over-year jump in estimates of closing costs charged by lenders and a 47 percent surge in estimates of closing costs charged by third parties. California, New York, Texas, and Utah had the highest closing fees; while Arkansas had the lowest.
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