Comments on: A Layman’s Guide to Mortgage Application Junk Fees

By: Appraiser Micro

Appraiser Micro — Tue, 07 Feb 2012 01:40:56 +0000

Junk fees – Now with AMC fees. For those not in the know about new lending process: AMC fee is the co-mingled total appraisal fee, of which an oftentimes undisclosed amount goes to the appraiser and the rest goes back to the appraisal management company, oftentimes a subsidiary of the lender. Future HUD1 disclosure rules brought forth by the cfpb may bring better consumer awareness here, but that remains to be seen.

By: Jerry

Jerry — Mon, 17 Oct 2011 12:12:26 +0000

I didn’t know that title insurance was a rip-off. This leads me to think about how much I must have paid on my last home. Is there any way to get rid of it?

By: Tom

Tom — Thu, 21 Jul 2011 04:38:48 +0000

Lender fees no longer have any tolerance, title fees have a 10% tolerance and if there is an error by either the lender pays to correction. Fees are accurate within those guidelines. There is no more “points” or “yield spread” that the loan officer splits. That was regulated out as of April 1 this year. The government may have created the regulation but reinforcement starts with the compliance dept of the lender, underwriting, title and finally the investor that takes the loan. The number of buybacks due to non compliance has grown so lenders are not likely to hide anything. Those that do won’t be around long.
Many of the federal workers let go in the last year went to be RESPA inspectors according to classes I’ve attended. Lots of eyes watching because the focus is on the mortgage business right now.

By: Tom

Tom — Tue, 19 Jul 2011 03:33:01 +0000

Good advice Todd,
Title companies like to Bundle their fees, which saves money for the buyer. Typically it would include the title insurance, expenses and endorsements for one fee instead of charging for document prep, efiling, courier etc.
Remember, the loan is filed with a county that charges a fee per page, the title company charges a fee for this that is estimated and reimburses the buyer if it is less.

By: Tom

Tom — Tue, 19 Jul 2011 03:28:01 +0000

Lenders don’t charge for or order the survey. The title company does this and it’s shown on the Settlement Statement. They are usually done if there is a reason to believe survey lines have been altered or structures or fences have been placed near or over a line. Such a circumstance would cloud a title.They are not common in most cities.

Fees from the lender are: Origination(1%), credit report, appraisal and if charged, fees for verification of employment, deposit, mortgage or rents. Only charged fees are reimbursed by the buyer.

By: Tom

Tom — Tue, 19 Jul 2011 03:20:27 +0000

Good comments Jerry,
When a credit report is run the cost to the one ordering is on the report. When I run a report the cost is $26, we bill $26 on the Settlement Statement because it’s reimbursement for a 3rd party expense. We are charged $400 for the appraisal and charge the same amount.
On title there is an owners policy that the seller pays, the buyer purchases the lenders policy, approximately $400. Title orders the flood report and pays a fee to do so.
The costs differ from company to company and probably state to state .

Some companies charge an application fee which generally includes the credit report, appraisal fee and tax transcript costs.

IF the lender is a broker there may be a processing fee, the investor they are using will have an underwriting fee as well. A mortgage bank will have an administration or processing/underwriting fee, not all of the above(hopefully).

The title company generates the Settlement Statement from the figures provided by the lender and adds their fees, real estate commissions & fees. They are required to be certain all expenses on the Settlement Statement meet current regulations and tolerances and are seperated by buyer & seller.
There’s very little room for junk fees and almost none for errors on the Settlement Statement. If there is an error in origination costs, the lender eats it, if title has an error they can be off by +-10%. If the annual percentage rate increases by more than .125% the lender must re-disclose the change within federal guidelines and the borrower has 3 days to review and accept or decline the change and continue or walk away.

After closing, the lender must sell the loan to an investor that once again checks everything and can ask the lender to repurchase the loan if it doesn’t comply.

There’s always some out there that would rather try to beat the system than serve their borrower, but they’re getting more and more scarce.
Still, know what your doing by shopping, researching and asking questions.

By: Len Penzo

Len Penzo — Tue, 19 Jul 2011 01:54:38 +0000

I agree with you, Bob. The lenders try to maximize their profits like any other business. It’s important that buyers beware. Again, folks, challenge your lenders at every opportunity regarding these fees. Make them defend their prices and explain them all, right down to the last detail.

By: Len Penzo

Len Penzo — Tue, 19 Jul 2011 01:51:54 +0000

Thanks again for the comments, Tom. But as long as there are exceptions to the rule regarding ethical lenders, posts like this will always be necessary.

By: Len Penzo

Len Penzo — Tue, 19 Jul 2011 01:30:24 +0000

Great tips, Ted. Thanks for taking the time to share them with us.

By: Len Penzo

Len Penzo — Tue, 19 Jul 2011 01:25:57 +0000

That’s exactly how the lenders like it too. Always challenge every loan fee with the same veracity you would if you saw dubious charges on a restaurant bill. Make the lenders explain EXACTLY what each fee is for and what the job being charged for entails.