The bad news is, fee cures and associated costs are adding to the already skyrocketing cost of originating a mortgage. The good news is, these costs are entirely preventable.
“The Hidden Cost of Fee Cures,” an analysis released by Intercontinental Exchange Inc. (ICE), chalks these costs up to the “Know Before You Owe” Rule, aka the TILA-RESPA Integrated Disclosure (TRID). TRID requires mortgage lenders to provide borrowers with a detailed accounting of costs and fees associated with purchasing or refinancing a home. Not only is the lender responsible for finding and fixing any errors made in the disclosure, some kinds of error require that they pay additional updated costs.
“With origination inching off a 30-year low, lenders need to be as efficient and detailed as possible. Every basis point counts,” said Tim Bowler, President of ICE Mortgage Technology. “Unfortunately, fee cures and the costs associated with them—entirely preventable expenses—are contributing to the already ballooning cost to originate a mortgage.”
Tracking of all the changing closing costs can be difficult, but inattention can be costly—literally. ICE reviewed almost 90,000 mortgages and found what many have long suspected: fee cures are cutting into origination revenue. Indeed, on average fee cures and related expenses have added $1,225 per loan. And the problem is more widespread than you’d think: in one six-month period, more than 30% of loans studied required a fee cure of some type.
What is worse … the trend seems to be growing. There were more than 31,000 transfer tax changes from 2021 through early 2023 that ICE Fee Solutions documented. That’s a lot for lenders to keep up with, especially since these changes can involve short implementation timelines, variable schedules, and substantial fee increases.
ICE’s full white paper, including information on how to minimize costs and maximize profits, can be found here.
