Refinancing fees

February 14, 2013 1:38 PM

The good faith estimate for my refinance included government recording charges $X, and title services/title insurance $Y. In the settlement statement, it turned out that the government recording charges were less than estimated, so the lawyer's office just increased the other fee so the total amount is still $(X+Y). Is this standard practice, or kind of a dick move?

The law office claims that their fees are "set" at that amount, and only the total $(X+Y), which did not increase, matters. This is in MA.

posted by Behemoth to work & money (7 answers total)

Probably depends on state/local jurisdiction for what is required and what is pure profit/gouging, but there's generally a googleable term "junk fees". A MA specific link

That they raised one to cover the under makes me think junk fees, but depends on what those fees were. The time to negotiate those, alas, is before you settle.
posted by k5.user at 1:49 PM on February 14

You have the right to shop for title insurance. My refinance lender tried to pull something similar on me. I said that I was going with Entitle Direct instead and they immediately revised the fee to match the original GFE.
posted by payoto at 2:27 PM on February 14

A dick move.
posted by Capri at 2:29 PM on February 14

No, that's not normal. My closing had to be rushed and the amount I wired to the lawyers ended up being more than the actual costs. They cut a check for me for the difference that day (and it was for about $1K, so not insignificant).
posted by Violet Hour at 3:08 PM on February 14

I do refinances in New York, but AFAIK the GFE rules are nationwide, and yes, that was a dick move.

The fee that the bank's attorney charges is paid under the "title services" umbrella, so that is probably what they raised.
posted by Lucinda at 6:49 PM on February 14

You have to recognize that lawyers' fees are one factor, relatively small, and then title insurance premiums are another. You may see $200 for the lawyer's charge and $2,200 for the title premiums.

What complicates it is that many title agencies are owned and operated by lawyers, although separate from their legal practices. The title agency doesn't get the $2,200 - the premium, less a commission, goes to the title insurance company.

The idea that fees are "set" and thus beyond their control is (in almost all jurisdictions) bullshit, but the interaction between legal fees and other charges muddies the waters.

If your refi was a good deal - and at 3-4%, how can you go wrong? - you still got a good deal.
posted by megatherium at 8:25 PM on February 14

Is this your lawyer? Did you sign a representation agreement?. I'd ask simply where in the documents you signed hiring the lawyer this provision is.
posted by Ironmouth at 10:13 PM on February 14