As part of efforts revealed in connection with his State of the Union address, President Joe Biden announced his plan to lower housing costs, including closing costs for refinances and mortgages.

These efforts include policies and pilots approved by the Federal Housing Finance Agency (FHFA) to waive the requirement for lender’s title insurance on certain refinances.

During the State of the Union, Biden said, “My administration is also eliminating title insurance fees for federally backed mortgages. When you refinance your home, this can save you $1,000.”

An announcement released before the address offered more details on the plan. “This would save thousands of homeowners up to $1,500, and an average of $750, and the lower upfront fees will unlock substantial savings for homeowners as mortgage rates continue to fall and more homeowners are able to refinance.”

On March 19 in Nevada (Las Vegas), Biden detailed his agenda to bring down the cost of housing. He discussed the investments the Biden-Harris administration has already made through the American Rescue Plan (ARP). The ARP provided $1 billion in Nevada to help boost affordable housing, lower housing costs, and keep homeowners and renters in their homes. This includes $700 million invested in affordable housing supply that includes major investments in senior housing. As a result, Clark County has several major 200-unit affordable housing developments coming, and about 1,000 new senior apartments on the way thanks to the ARP.

FHFA Director Sandra Thompson noted that for many, “closing costs represent a substantial affordability barrier to purchasing or refinancing a home.”

Biden also announced the Consumer Financial Protection Bureau (CFPB) will “pursue rulemaking and guidance to address anticompetitive closing costs imposed by lenders on homebuyers and homeowners.”

“These charges — which benefit the lender but not the borrower — can add thousands to the upfront costs of a mortgage,” the announcement stated. “Those upfront costs cut into the amount of homebuyers’ down payments and reduce homeowners’ available equity.”

The CFPB wasted no time taking steps to implement this plan by seeking information from consumers.

“Families who manage to save up for a down payment and get approved for a mortgage often get an unwelcome surprise: closing costs that all too often are full of junk fees,” the bureau stated in a blog post. “Closing costs are the fees you pay on the day you finalize the purchase of your home, and they include things like title insurance, credit report and appraisal fees, origination fees, and more. The CFPB is working to ensure that consumers can navigate the closing process more easily, shop around, and save money.

“While home prices and interest rates often command our attention, closing costs also contribute to borrowers’ monthly burdens,” the post continued. “One measure of closing costs is total loan costs. Total loan costs include origination fees, appraisal and credit report fees, title insurance, discount points, and other fees. From 2021 to 2022, median total loan costs rose sharply, increasing by 21.8 percent on home purchase loans.”

It further stated, “It appears that some closing costs are high and increasing because there is little competition. Borrowers are required to pay for many of the costs associated with closing a home loan but cannot pick the provider and do not benefit from the service. In many cases, the lender simply picks from a very small universe of providers, and the costs are then passed on to the borrower.”

The National Association of Realtors (NAR) thanked Biden and regulators for their renewed focus on housing affordability.

“The lack of affordable housing supply is hurting the middle class and depriving first-generation and first-time homebuyers of the financial security that homeownership and the American Dream provide,” NAR President Kevin Sears stated. “NAR first sounded the alarm on this issue with original research showing a nationwide shortage of 5.5 million affordable housing units. We commend President Biden’s commitment to an all-of-government approach to solve this problem. NAR has proposed and advocated for many of these proposals, which together would make serious headway toward fixing this crisis.”

Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit joined in general support for new measures to expand housing affordability but expressed apprehension toward proposed closing cost reforms.

“MBA has significant concerns that some of the proposals on closing costs and title insurance could undermine consumer protections, increase risk, and reduce competition,” he stated. “In 2015, the industry implemented final rules from the CFPB making comprehensive reforms to mortgage disclosures to increase clarity and transparency and to help facilitate consumer shopping. In 2020, the CFPB reviewed and praised its own rules. Suggestions that another revamp of these rules is needed depart from the legal regime created by Congress in the Dodd-Frank Act and will only increase regulatory costs and make it untenable for smaller lenders to compete.”