Another Closing Fee Rip-off

Two homebuyer clients of ours recently had the same problem,
excessive costs charged by a settlement agent. These happened to be independent
escrow companies not affiliated with a title company, but it could just as
easily happen with a title company escrow.

In spite of how much the politicians and bureaucrats in Washingtontalk about
the "market forces" solving all shopping problems, this is a glaring exception. In 25 years I have never seen a buyer or a
seller choose an escrow company. The buyers and sellers haven’t the foggiest
idea about such things, and the NEVER shop for one. The settlement agent and
title company are invariably chosen by one of the real estate agents.

These agents seldom have a clue about the company’s pricing
either.  The choice is always based on
something other then price. The people who are paying for it, the buyer and
seller, do not find out about the charges until right before closing, when it’s
too late to do anything about it.  In
fact, these companies often delay giving the clients this information so they
don’t have to argue about pricing.

In accordance with RESPA, clients are entitled to see these
24 hours before closing. You can get it weeks before closing, but you have to insist.
Be sure you do. More important, ask for a schedule of their fees when escrow is
opened. Then you have time to negotiate if the fees are excessive.

 More in this topic to come.

Tagged as: closing costs, credit blog, home buying, home loans, mortgage loans, mortgages, real estate, real estate agents, RESPA

Randy Johnson Randy is a Credit.com contributor and seasoned mortgage expert. He writes about home buying, mortgage laws and real estate finance issues. He has financed over $1 billion in properties, is the author of How to Save Thousands of Dollars on your Home Mortgage and he is a feature columnist for Savvy Borrower.