Closing Costs on the Rise?
As the cost of originating a loan has increased in 2013, consumers are shouldering more closing costs. In their quarterly study on closing costs, DocuTech Corp. found that the median closing costs in Q1 2013 increased by 0.4 percent from December 2012 to March 2013. Closing costs had decreased by 0.5 percent from April to November 2012.
“Overall, settlement charges are still down from a year ago. However as reported by a recent Mortgage Bankers Association (MBA) study, the cost of origination has slightly increased,” said Scott K. Stucky, chief operating officer of DocuTech. “A large part of that increase is lenders spending more money on compliance costs due to changing regulations within the industry – with these costs now being passed onto the borrower.”
In December 2012, the median settlement charge was 2.561 percent of the loan value. The charges continued to increase each month until it reached 2.940 percent in March 2013. These findings are a part of a quarterly effort to highlight how changes in the mortgage industry are impacting the cost for consumers to obtain a mortgage.
“We are starting to see firsthand through our quarterly tracking reports of our nationwide lender base that it’s not just the typical originator, servicer or lender feeling industry change; the consumer is beginning to feel it in their wallet too,” said Stucky. “The uncertainty looming in the industry will continue to have a direct correlation onto the consumer until a level of confidence is reinforced and implementation dates take effect.”
DocuTech tracks its closing costs through the strong integrations between its document compliance system, ConformX, and lenders’ loan origination software. The data files are transmitted from the lender to DocuTech through the loan origination system to generate the documents. Therefore, DocuTech has access to a significant amount of financial data regarding mortgage lending transactions including all of the fee and collateral information.
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