One of the many unsavory features of the home loan market is that borrowers, when they close on their loans, sometimes find their settlement costs substantially higher than the earlier estimates given to them in the Good Faith Estimate of Settlement (GFE).

The Mortgage Bankers Association is proposing a 2% max increase in final lender and mortgage charges above the Good Faith Estimate.

A bigger problem is when a lender low balls third party charges such as escrow and title fees on the Good Faith Estimate. The Mortgage Bankers Association is proposing a 10% max increase for those above the Good Faith Estimate.

I think the mortgage industry will be a ripe target for government regulation over the next few years. This proposal may be a preemptive strike by the Mortgage Bankers Association to avoid more stringent regulations.

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