If the Kansas Bankers Association is so concerned about lowering fees, perhaps it ought to encourage its members to lower some of the fees they routinely charge their customers. That would likely help more Kansans than repealing the mortgage registration fee.
Eliminating that fee, which has been in effect since 1925, would have a negligible effect on the residential housing market and on homebuyers, but would have a considerable negative impact on Kansas counties.
The Kansas Senate has approved a bill to repeal the fee, and the issue has been referred to the House Taxation Committee to be addressed when the Legislature reconvenes April 30. The fee is $2.60 on each $1,000 borrowed on a home mortgage. On a $150,000 mortgage, the tax would come to $390. That’s not insignificant, but it’s hardly the deal killer for homebuyers that both the bankers association and the Kansas Realtors Association suggest.
Riley County Counselor Clancy Holeman put it well when he called that notion, “ridiculous!” He added, “I defy anyone to picture a family or an individual buyer picking out a home, agreeing on the price, then sitting down to finish the closing and suddenly saying, ‘What’s this mortgage fee? I won’t pay it. We’re leaving the table.’
“Just trying to visualize that is crazy!”
County commissioners statewide oppose repeal because doing so would siphon badly needed county revenue. Riley County alone would lose roughly $1 million a year. Commissioners’ only options would be raising taxes or cutting services. Neither is popular with constituents.
The Realtors and bankers associations also say the mortgage fee is unfair because people who pay cash for real estate don’t pay it. There is some validity to that claim, but the solution — repeal — would cause more problems than it would solve.
County governments across the state, in part because of actions the Legislature has taken, already are scrambling to provide necessary services without raising property taxes. Repealing the mortgage registration fee would only complicate that job. And whether counties raise taxes or cut services, their decisions would affect even those who have paid the mortgage fee.
A better option, one that could lower the mortgage registration fee without eating into county revenue, would be initiating a fee that buyers who pay cash would have to pay when they register their deeds. Good minds could come up with other options. There’s no need to rush into this change. After all, the fee has existed for 89 years without any real harm.