CFPB cracks down on junk fees: What you need to know

Good morning. This is Mortgage Nuggets, the newsletter you lean on for fresh mortgage news. Today’s newsletter is 647 words, a 2.5-minute read.

1. CFPB supports lawsuit against Mr. Cooper over alleged $25 "junk fee"

The Consumer Financial Protection Bureau (CFPB) has backed a lawsuit against mortgage lender Mr. Cooper, accusing the company of illegally charging a $25 "junk fee" for payoff quote statements.

The CFPB claims Mr. Cooper violated the Fair Debt Collection Practices Act by imposing a fee not disclosed in the original mortgage agreements. The lawsuit, initiated by borrowers in April, argues that the fee is unjustified and serves as a profit center for the company.

Mr. Cooper disputes the allegations, stating that the fee was for expedited services. The CFPB is increasingly focused on eliminating unauthorized fees in the mortgage industry.

2. Charted: Housing affordability index

The following graph highlights the dramatic decline in housing affordability, showing how the typical family's ability to qualify for a mortgage on a median-priced home has deteriorated to levels not seen since the 1980s.

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3. More Nuggets

💀 Redfin’s CEO said the company’s plan B if mortgage rates don’t come down is to “drink our own urine or our competitors’ blood, stay in the foxhole.” (TechCrunch)

🏘️ New houses now cost less per square foot than old houses. (Axios)

⬆️ In 2021, just 4% of mortgage originations were ARMs. In May 2024, ARMs made up 15.5% of mortgage originations. (CoreLogic)

💸 Guild delivers $37M profit as origination volume jumps 69%. (HousingWire)

4. These cities have more housing stock than before COVID-19

Homebuyers have had fewer houses to choose from than they did before the pandemic—even though active listings were up by more than 36% in July. But some places are opposing the trend.

A dozen metros among the top 50 largest areas saw higher housing stock levels compared with typical 2017 to 2019 levels in July, according to the monthly housing report from Realtor®. These are those 12 metros:

5. Important U.S. economic reports due this week

This week offers critical US economic reports, including data on inflation and jobless claims, any of which could shake markets all over again.

• Monday: The U.S. federal budget report will provide insights into government spending and fiscal health.

• Tuesday: The Producer Price Index (PPI) and Core PPI, important indicators of wholesale inflation, will be released.

• Wednesday: The focus shifts to consumer inflation with the release of the Consumer Price Index (CPI) and Core CPI.

• Thursday: A busy day with initial jobless claims, U.S. retail sales, industrial production, and the Import Price Index, offering a broad view of the economy’s performance.

• Friday: The week ends with preliminary consumer sentiment figures and the Home Builder Confidence Index, shedding light on economic outlooks from both consumers and the housing industry.

These reports can potentially influence mortgage rates, making it crucial to stay informed as the week progresses.

☀️ Thank you. You’re all caught up. See you on Wednesday!

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