Have Minnesota home buyers overspent by $63 million since 2010?
Consumer Advocates in American Real Estate--a nonprofit that monitors the housing market--says Minnesota home buyers have collectively spent more than $63 million in needless fees since 2010.
"It's all unnecessary," says Doug Miller, real estate attorney and executive director of CAARE. "There's no good reason for it."
The watchdog group released a statement on its website accusing the Minnesota Department of Commerce of sending out a misleading press release to realtors, alleging it effectively eliminated certain discounts, and transferred a fee traditionally paid by the home seller to the buyer.
From the statement:
A typical home buyer now pays 67% more for title insurance and in many cases more than double what the sellers used to pay for abstracting. This unfortunate and ill-considered change has cost Minnesota homebuyers at least $500 per transaction much more with higher priced homes. This adds up to at least $63,000,000 in unnecessary fees and extra profits to title companies. In a real estate environment where many consumers (especially low income ones) are unable to bear any additional costs, this has been a very costly decision, both to the consumers and to the recovery of the real estate market.
Matt Swenson, Department of Commerce spokesman, denies the allegations, saying they merely relayed changes mandated by the U.S. Department of Housing and Urban Development. Swenson says the change in question was implementing a new form (known as HUD-1), which only discloses settlement costs to the borrower, and makes the process more transparent. He adds they haven't received any complaints.
But Miller says the Department of Commerce is misconstruing the change, and in turn putting home buyers at a disadvantage. "It's unfair," he says. "They regulated away this fabulous discount ... That's what we're so upset about."
Click the next page for the watchdog group's full list of allegations.