Home buyer closing costs could drop with fed’s help

Consumers benefit when loan providers guarantee fees

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Every consumer taking a home mortgage today pays a tax in unnecessary charges for the various third-party services required to deliver the mortgage. These include services provided by title insurance companies, mortgage insurance companies, appraisers, credit reporting agencies, flood insurance companies, and escrow companies. The taxes don't go to government, and in most cases the service providers don't keep them. Rather, they are paid to those who are positioned to direct which service provider will receive the business; these referral agents are mainly lenders, Realtors and builders. The payments include referral fees, which are sometimes legal and sometimes illegal. Some of the tax is absorbed by marketing expenses directed to the same referral agents. The problem is not that there isn't competition in these industries, as the competition is actually intense, but it is directed to referral agents rather than to the consumers who pay for the service. Competition directed to ref...