Letter Cites CHLA Opposition to ICE Purchase of Black Knight to Highlight Enhanced Negative Impact on Borrowers
The Community Home Lenders of America (CHLA) submitted a formal comment letter to the Federal Housing Finance Agency (FHFA), in response to FHFA”s Request for Information on Fintech issues.
Citing concerns about the proposed purchase by ICE of Black Knight, which CHLA opposed in a June letter to the FTC and Justice Department, CHLA in its letter to FHFA asked FHFA to:
(1) Prohibit the use of “click fees” in conjunction with Enterprise mortgage loans, and
(2) Prohibit the practice of “tying” optional software services fees to essential loan origination software fees in conjunction with Enterprise loans.
CHLA’s FHFA comment letter notes that an ICE Purchase of Black Knight would give the combined entity an 80% market share of software services for mortgage origination for lenders that don’t have their own proprietary systems. This would increase the vulnerability of smaller lenders to price increases on contract renewal, with ICE’s main competitor now joining forces with ICE. In turn, these costs would be passed along to borrowers.
The ICE purchase of Black Knight would also enhance the ability of the combined entity to assess click fees, which are fees ICE charges vendors to gain access to the lender’s own data. CHLA has called these fees “junk fees” and has separately asked the CFPB to ban as part of CFPB’s focus on junk fees.
And the purchase would also make it easier for the combined entity to engage in tying practices, where the provider forces or pressures a lender to buy optional services they don’t want or need, as part of their purchasing essential mortgage origination software services.
Because both practices unnecessarily raise the cost of mortgage loans, with no corresponding value to borrowers, CHLA is calling on FHFA and the GSEs to ban both practices on GSE loans.
Read the full letter here: FHFA Request for Information-Fintech