Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, released “The hidden cost of fee cures,” a whitepaper based on an analysis of preventable expenses eroding mortgage lender profits.
The TILA-RESPA Integrated Disclosure (TRID) rule, also known as “know before you owe,” requires mortgage lenders to provide borrowers with a detailed accounting of costs and fees associated with purchasing or refinancing a home. Any errors made in the disclosure are the lender’s responsibility to detect and rectify. Depending on the specifics of the errors, lenders may be required to pay the difference between the disclosed and 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.”
Keeping track of frequently changing closing costs, especially transfer taxes, can be a major pain point for lenders. Failure to keep up with such changes can be an expensive proposition. Anecdotal evidence has long-suggested fee cures are cutting into origination revenue and, indeed, an ICE review of nearly 90,000 mortgages found an average of $1,225 per loan wasted on fee cures and related expenses.
Not only is this a significant amount when extrapolated over a lender’s entire pipeline, but the prevalence of such cures is startling. The study also found that over a period of just six months, more than one out of every three loans reviewed for this study required some type of fee cure.
ICE Fee Solutions documented more than 31,000 transfer tax changes from 2021 through early 2023, and the trend is accelerating. These changes can have short implementation timelines, variable schedules, and substantial fee increases, all of which pose operational challenges for lenders trying to rapidly document these changes.
For more information on the true cost of fee cures, how to minimize these preventable expenses to maximize profit margins, download ICE’s latest whitepaper here.
