5 ms·

I would point out that "400% increase in mortgage credit check fees" sounds probably a lot worse than the actual number - which is like.. $150 at the time you a

I would point out that "400% increase in mortgage credit check fees" sounds probably a lot worse than the actual number - which is like.. $150 at the time you are getting a mortgage. Of all the fees associated with buying your average $400k home, I don't think the $150 credit check fee is the big pain point. Title insurance is a much bigger scam/cost. The various state & local taxes at closing are orders of magnitude higher. Not to mention brokers fees (which are somewhat being handled as of late).

CPLX 2y ago
It’s an application fee so it applies just for trying to get a mortgage, which is entirely different. The mortgage companies have to pay it even for applicants that don’t end up actually becoming customers.
- Retric 2y ago
  Which means they need hand those costs to the people who actually get a mortgage, meaning you’re probably paying closer to 500$ than 150$.
deleted 2y ago
[deleted]
mschuster91 2y ago
> Title insurance is a much bigger scam/cost. Given the horror stories that crop up regularly on HN or Reddit, these insurances actually make sense.
- ghaff 2y ago
  In the US, it's unrealistic to assume there's a canonical federal database which tracks every potential title complication including property tax liens at the local level. In my case, I had a (resolved) issue where the property/house I was buying was a subdivided larger property with an agricultural lien (for an apple orchard) that hadn't been lifted yet. Titles have a lot of opportunities for complications in many places; there's no simple technology fix. The insurance is annoying but it's an area that has the potential for really expensive issues.
  - vel0city 2y ago
    I'm definitely no expert on the law in every state, but from the states I know of there are central appraisal districts in charge of real estate tax appraisals. They already have to keep track of ownership of properties and their tax assessments, might as well just expand their domain to also include lien registries as well. I totally get it would be quite a mess and complication and issue with federalism to have the federal government have a single database, but at least having real databases somewhere that can be publicly queried would be a massive step forward towards making title insurance no longer a thing.
    - ghaff 2y ago
      I'm not opposed to the idea but someone needs to hold the bag when mistakes are made and then you're essentially back to having title insurance in some form even if it's the general taxpayer that is doing the funding.
      - vel0city 2y ago
        A large part of the cost of title insurance is because the current system of tracking such things is such a massive mess. If you massively reduce the likelihood of issues cropping up by having actually good systems in place, you don't need to hire the teams of people to actually look into the properties and find the irregularities and end up still missing things from time to time. Just query the database. Are there any liens registered? No? It is clear then. Anyone that failed to properly file it in the database is just out of luck. Insurance on something that constantly sees catastrophe is far more expensive than insurance on something that rarely ever sees problems.
      - mschuster91 2y ago
        > I'm not opposed to the idea but someone needs to hold the bag when mistakes are made Well, that's obvious: the local authority in charge of record keeping.
        ghaff 2y ago
e63f67dd-065b 2y ago
The article mentions that one in ten pulls actually convert into a mortgage, so actually each borrower is paying $1500.
- jjtheblunt 2y ago
  Do you mean 1 in 10 paying $150 use the payment and 9 in 10 throw it away?
  - e63f67dd-065b 2y ago
    > Only one out of every ten prospective customers ends up taking out a mortgage, so higher prices fronted by mortgage bankers add up I read this as for every ten customers who get to a point where they get their credit pulled, only one of them end up closing on the mortgage (ie buying a house). Could be due to shopping around, negotiations falling through, or the other millions of reasons you could end up wanting to buy a house but not close the transaction.
- sidewndr46 2y ago
  My experience was that rental companies do the same thing for a lease. I paid for one more than once when leasing a house
morpheuskafka 2y ago
Title insurance could be safely eliminated with something called the Torrens title system, it was tried in the US but never took off outside of Guam. The issue comes from the lack of any definitive record of property ownership, raising the possibility that challenges may be raised in court in the future that weren't known to the buyer.
chollida1 2y ago
> Title insurance is a much bigger scam/cost. I wouldn't cut out Title insurance, I have two friends for whom it saved low 7 digits each due to fraud in one case and liens in another. It's incredibly important in today's market and I can't see how you can call it a scam, unless you also view car/health/life insurance as a scam as well, in which case we just disagree:)
- flerchin 2y ago
  It could be handled with a government maintained database for orders of magnitude less resources. There should not be giant title insurance buildings in every city.
  - chollida1 2y ago
    Ok, so if someone impersonates me and sells my home and runs off with the money this is one scenario that title insurance covers my losses. How does a government database help in this case? This is a scenario that happens more often than you'd think with empty condos and a foreign owner who isn't around to look after their property. You'd still need title insurance even though you have a "government maintained database"
    - flerchin 2y ago
      That scenario is in fact not covered by title insurance. Title insurance would be for the schmuck who bought your house. I'm not saying that the function of title insurance companies would go away, but it would largely be obviated by an accurate single source of truth for land titling, and yes some insurance function that the government could provide for a much smaller fee.
      - chollida1 2y ago
        It is indeed covered as I've had a personal friend have to use it for that reason. The buyer got to keep the house and the old owner had title insurance pay them for the loss of their home.
splwjs 2y ago
Last time I looked at the amortization schedule for a 30 year fixed mortgage the payback was about 250% of the loan amount. No other figures are consequential. Mortgages are a predatory thing pointed at the financially illiterate and the hopeless right now.
- neogodless 2y ago
  This is a pretty limited view of mortgages. In varies across countries, but in the U.S. a (relatively) low APR fixed rate 30 year mortgage is an amazing way to utilize leverage (only put up ~20% collateral) on an appreciating asset. Paying $400,000 for a mortgage vs paying $80,000 and 6% over 30 years, but investing the remaining $320,000 in the stock market (returning ~7% after inflation) and your housing payment grows much slower than inflation. That doesn't mean every mortgage is a good idea, or there aren't circumstances where the borrower ends up losing out, but it's a tool that can be utilized if you learn to understand it.
xivzgrev 2y ago
Well that’s exactly the point. There was another recent article here on cartels that suck small amounts of blood from lots of people. Too small for anyone to individually care but collectively a lot! What’s particularly insulting is that credit scores are commoditized - they are free to go check. Technically it’s vantage score vs FICO but generally the same and definitely not worth $150.
- gosub100 2y ago
  For a while in the early 2000s and 90s they weren't free to read. It was outrageous: companies collecting data on us that can impact our lives but we need to pay THEM to see what they know about us.

CPLX 2y ago

It’s an application fee so it applies just for trying to get a mortgage, which is entirely different. The mortgage companies have to pay it even for applicants that don’t end up actually becoming customers.

Retric 2y ago
Which means they need hand those costs to the people who actually get a mortgage, meaning you’re probably paying closer to 500$ than 150$.

deleted 2y ago

[deleted]

mschuster91 2y ago

> Title insurance is a much bigger scam/cost. Given the horror stories that crop up regularly on HN or Reddit, these insurances actually make sense.

ghaff 2y ago
In the US, it's unrealistic to assume there's a canonical federal database which tracks every potential title complication including property tax liens at the local level. In my case, I had a (resolved) issue where the property/house I was buying was a subdivided larger property with an agricultural lien (for an apple orchard) that hadn't been lifted yet. Titles have a lot of opportunities for complications in many places; there's no simple technology fix. The insurance is annoying but it's an area that has the potential for really expensive issues.
- vel0city 2y ago
  I'm definitely no expert on the law in every state, but from the states I know of there are central appraisal districts in charge of real estate tax appraisals. They already have to keep track of ownership of properties and their tax assessments, might as well just expand their domain to also include lien registries as well. I totally get it would be quite a mess and complication and issue with federalism to have the federal government have a single database, but at least having real databases somewhere that can be publicly queried would be a massive step forward towards making title insurance no longer a thing.
  - ghaff 2y ago
    I'm not opposed to the idea but someone needs to hold the bag when mistakes are made and then you're essentially back to having title insurance in some form even if it's the general taxpayer that is doing the funding.
    - vel0city 2y ago
      A large part of the cost of title insurance is because the current system of tracking such things is such a massive mess. If you massively reduce the likelihood of issues cropping up by having actually good systems in place, you don't need to hire the teams of people to actually look into the properties and find the irregularities and end up still missing things from time to time. Just query the database. Are there any liens registered? No? It is clear then. Anyone that failed to properly file it in the database is just out of luck. Insurance on something that constantly sees catastrophe is far more expensive than insurance on something that rarely ever sees problems.
    - mschuster91 2y ago
      > I'm not opposed to the idea but someone needs to hold the bag when mistakes are made Well, that's obvious: the local authority in charge of record keeping.
      - ghaff 2y ago

e63f67dd-065b 2y ago

The article mentions that one in ten pulls actually convert into a mortgage, so actually each borrower is paying $1500.

jjtheblunt 2y ago
Do you mean 1 in 10 paying $150 use the payment and 9 in 10 throw it away?
- e63f67dd-065b 2y ago
  > Only one out of every ten prospective customers ends up taking out a mortgage, so higher prices fronted by mortgage bankers add up I read this as for every ten customers who get to a point where they get their credit pulled, only one of them end up closing on the mortgage (ie buying a house). Could be due to shopping around, negotiations falling through, or the other millions of reasons you could end up wanting to buy a house but not close the transaction.
sidewndr46 2y ago
My experience was that rental companies do the same thing for a lease. I paid for one more than once when leasing a house

morpheuskafka 2y ago

Title insurance could be safely eliminated with something called the Torrens title system, it was tried in the US but never took off outside of Guam. The issue comes from the lack of any definitive record of property ownership, raising the possibility that challenges may be raised in court in the future that weren't known to the buyer.

chollida1 2y ago

> Title insurance is a much bigger scam/cost. I wouldn't cut out Title insurance, I have two friends for whom it saved low 7 digits each due to fraud in one case and liens in another. It's incredibly important in today's market and I can't see how you can call it a scam, unless you also view car/health/life insurance as a scam as well, in which case we just disagree:)

flerchin 2y ago
It could be handled with a government maintained database for orders of magnitude less resources. There should not be giant title insurance buildings in every city.
- chollida1 2y ago
  Ok, so if someone impersonates me and sells my home and runs off with the money this is one scenario that title insurance covers my losses. How does a government database help in this case? This is a scenario that happens more often than you'd think with empty condos and a foreign owner who isn't around to look after their property. You'd still need title insurance even though you have a "government maintained database"
  - flerchin 2y ago
    That scenario is in fact not covered by title insurance. Title insurance would be for the schmuck who bought your house. I'm not saying that the function of title insurance companies would go away, but it would largely be obviated by an accurate single source of truth for land titling, and yes some insurance function that the government could provide for a much smaller fee.
    - chollida1 2y ago
      It is indeed covered as I've had a personal friend have to use it for that reason. The buyer got to keep the house and the old owner had title insurance pay them for the loss of their home.

splwjs 2y ago

Last time I looked at the amortization schedule for a 30 year fixed mortgage the payback was about 250% of the loan amount. No other figures are consequential. Mortgages are a predatory thing pointed at the financially illiterate and the hopeless right now.

neogodless 2y ago
This is a pretty limited view of mortgages. In varies across countries, but in the U.S. a (relatively) low APR fixed rate 30 year mortgage is an amazing way to utilize leverage (only put up ~20% collateral) on an appreciating asset. Paying $400,000 for a mortgage vs paying $80,000 and 6% over 30 years, but investing the remaining $320,000 in the stock market (returning ~7% after inflation) and your housing payment grows much slower than inflation. That doesn't mean every mortgage is a good idea, or there aren't circumstances where the borrower ends up losing out, but it's a tool that can be utilized if you learn to understand it.

xivzgrev 2y ago

Well that’s exactly the point. There was another recent article here on cartels that suck small amounts of blood from lots of people. Too small for anyone to individually care but collectively a lot! What’s particularly insulting is that credit scores are commoditized - they are free to go check. Technically it’s vantage score vs FICO but generally the same and definitely not worth $150.

gosub100 2y ago
For a while in the early 2000s and 90s they weren't free to read. It was outrageous: companies collecting data on us that can impact our lives but we need to pay THEM to see what they know about us.