A politician’s promises don’t usually carry much weight, but somehow over the past year a lot of hot air has been transformed into brick-thick tomes of new federal and state financial regulations.

Now, real estate and mortgage professionals say the new burdens they’re shouldering are resulting in heftier fees at the closing table – and a recent survey backs them up. Online rate comparison site Bankrate suggests overall closing costs are up more than 43 percent in the past year in Massachusetts.

“There’s really not a line item there that hasn’t gone up,” said Brian Koss, managing partner of the Danvers-based Mortgage Network Inc. “These used to be called ‘junk fees,’ but they’re really not [anymore].”

According to Bankrate’s annual survey of closing costs, Massachusetts jumped seven places in the overall ranking of most expensive states in which to close this year, rising to 11 from 18 among the 50 states and the District of Colombia. Compared to 2009, Massachusetts’ closing costs rose to $4,025 from $2,821 on a $200,000 loan.

Added Layers

In some ways the increase is not unexpected. Revisions to the Real Estate Settlement and Procedures Act (RESPA) stipulate that if final fees charged don’t closely (and in some cases, exactly) match the Good Faith Estimate (GFE) provided to borrowers when shopping for a loan, lenders are subject to substantial fines. That led many industry observers to predict estimation inflation, with lenders increasing estimated costs in order to be certain of not exceeding them.

“I think what happened was that everybody was running scared with the new RESPA changes,” Keith McNamara, director of industry relations for regional title insurer CATIC, told Banker & Tradesman. “God forbid you were out of sync with the good faith. That may have meant higher estimates…If they were thinking $750, they may have put $1,000, to cover themselves.”

But brokers and bankers say it’s not just estimates which have risen – actual costs are up, too, with the new regulatory changes imposing increases in many of the line item services included as part of closing costs.

That’s also in line with the Bankrate survey. Of the $1,204 average increase in price nationwide, $788, or 65 percent, was attributed to increases in third-party origination fees, including appraisals, title insurance and credit checks.

“If you’ve gone to an appraisal management firm, for us that added a $100 fee on every appraisal,” said Amy Tierce, president of the Needham office of Fairway Independent Mortgage. “For the loans in general, we are now required to run some kind of a fraud guard system on every single loan… [also,] we are required to get tax transcripts on every single loan. So there are just so many added layers of costs because of additional layers of work we have to do to make each loan work.”

Out Of Control

All the i-dotting and t-crossing doesn’t just mean increased costs for incidentals; it also means each loan takes more time to process. A loan officer who could normally put through four to six loans in a day can now only manage two or three, Koss said.

The increases may already be spurring borrowers to shop around more for subsidiary services. That would be a significant break with the past, when many borrowers were happy to use their lender’s recommendation and avoid the hassle of searching for and evaluating a provider themselves.

Under RESPA, banks must provide and stick to cost estimates for their recommended providers when giving the borrower a GFE, but borrowers are still free to seek alternates for services like title search.

“I’m talking to some of the big banks, and they’re all saying the same things – that less than 10 percent are actually picking the identified provider,” said McNamara.

Jaclynn Sulfaro, president of the Massachusetts Mortgage Association, says that the increased competition and service shopping has meant tighter margins.

“Any discrepancies, I’m eating them,” Sulfaro said. “There’s a 10 percent tolerance [from the quote in the GFE], and that’s it,” so when service providers charge more than estimated, the difference comes out of her profits.

“That stuff’s out of our control,” she said.