WASHINGTON—Meaningful opportunities exist for the mortgage industry to increase transparency around closing costs and potentially help save consumers money, Fannie Mae said, citing a new survey.
Fannie Mae’s Mortgage Lender Sentiment Survey (MLSS) special topic analysis asked mortgage lenders about opportunities to simplify and standardize closing cost line-item descriptions, as well as their opinions on which cost areas would benefit from clearer definitions to increase transparency for borrowers.
Among the key findings:
- While 60% of lenders believe it’s easy to accurately estimate closing costs, their experience explaining these costs to borrowers is mixed: Only half of lenders told us that it’s easy to explain closing costs to borrowers
- The majority of lenders (81%) agreed that simplifying and standardizing closing cost line-item descriptions would be valuable for the mortgage industry. Respondents indicated that increasing transparency, particularly for borrowers, would be the most important benefit of such an effort, followed by decreasing compliance costs, and helping consumers comparison-shop
- Lenders said “getting key players to align on standardization” is the biggest implementation challenge, followed by making the necessary technology updates (e.g., integrating with loan origination systems or industry data portals)