Mortgage filter: junk fees

January 20, 2007 10:25 AM

Mortgage filter: junk fees

We are about to close on a house and are reviewing the settlement statement. There are some of the infamous junk fees and we are trying decide which to protest:

Items payable in Connection with Loan
-- FNMA underwriting fee $30
-- Document preparation fee $500
Title Charges
-- Settlement or closing fee $250
-- Courier/Email fee $30

The document preparation fee is definitely bogus, so we will protest that.

"Underwriting fee" is commonly mentioned as a junk fee, but this is an "FNMA underwriting fee" (ie Fannie May). This is either still a junk fee with FNMA used as an attempt to legitimize it, or it is really legit. Which?

The 2 fees listed under title charges are also commonly mentioned in the list of junk fees, but they charged by the title company, not the lender. Does this legitmize them or are they still junk fees?

If they refuse, we can't back out of the whole deal (well, we could but we don't want to), but we will threaten taking them to small claims court after the deal is done and see if that softens them up. Any other suggestions about how to counter a refusal to dismiss these?

I've read the previous askmefi questions on this subject.

posted by allelopath to work & money (6 comments total)

FWIW, we're about to close too. Our costs include:

LOAN:
-- Processing fee $500
-- Underwriting fee $595
-- Tax related service fee $85
-- Messenger/ Courier $45

TITLE:
-- Closing or Escrow fee $300

It's not particularly useful information to you -- but perhaps it's nice to know that you're getting stiffed less than us. You've inspired me to double check them with the lender though.
posted by NailsTheCat at 12:05 PM on January 20, 2007

I help close loans all the time.

Of all of those, I think it would be easiest to get rid of the underwriting fee. The courier, depending upon what it is being used for, is an actual expense that the attorney is incurring getting either a payment (to the old mortgage company) or the documents to somewhere else. Usually I see $50.00 courier fees. If it's related to something that is being done for the seller, rather than for YOU, you stand a good chance of getting it moved to their side of the balance sheet.

Settlement fee - in my world this usually equates to the attorney's charge. The document prep fee is to do with personnel time spent preparing your documents, which is something they've actually done but may or may not be worth what they're charging. That's the one that looks high to me. I can't really say without looking at the HUD-1 though.

Are you looking at just a list of fees, or are you looking at the preliminary closing statement (HUD-1)? When we bought our house, our mortgage lender did everything she could to get all kinds of fees transferred to the seller (the seller really wanted to sell - she played that for us for all it was worth, which was a lot). Your real estate agent or mortgage lender might be willing to go to bat for you on this, and I would insinuate them into the process before threatening court. I mean, this is an attorney, and junk fee or not, they aren't going to be real impressed with a threat to take them to small claims. Also, they don't have to close this loan, and probably you don't want to have to look for another closing attorney if you are this far along. So, in short, were I you, if I thought it would work, I would try to force the fees over to the seller's side where ever possible. You might be able to get some of them lowered, but if you can get them put over to the seller's side, then they have to deal with it, and if they try to shove it back on to you, then by that time they might just drop the fee or be willing to lower it in order to get you guys to stop bickering. Thing is though, these guys do a gazillion real estate closings a week, so it may be hard to get them to care.
posted by Medieval Maven at 12:18 PM on January 20, 2007

In Ontario, the statutory government fees for filings are $70 per Land Registry registration (used to transfer the property and register title and anything else that may need to be done), $18-$35 per property search (to establish chain of title and check for encumberances) and $11 per person for Writ (debt) searches. A typical two-sided property transaction involving 4 people, 1 property, a removed mortgage and a new mortgage can cost between $200-$500 in government fees alone. Add time and labour to that (at a lawyer's rate) and you can see how a document preparation fee could get up to $500. Assuming that those are the fees you are discussing.
posted by loquax at 12:40 PM on January 20, 2007

Start by looking at the contract. See if the seller agreed to pay any of the fees that have been listed on your side of the Settlement Statement. Usually the seller pays the settlement fee in my area.

Look at your original Good Faith Estimate from the lender. Did they tell you in advance you would be paying a "Doc Prep" fee? Most lender documents are done with computers and a $500.00 fee is excessive. However,if they did not charge an Origination Fee and Underwriting Fee then the Doc Prep Fee is not that bad.
posted by Mhead at 8:27 PM on January 20, 2007

Consider yourself lucky they didn't charge you for a flood zone certification fee and move on.
posted by ilsa at 11:30 PM on January 20, 2007

The fees I have mentioned are listed as to be paid by us, the buyer.

We don't have a flood zone certification fee, but there is a charge called 'flood certificate'. It is only $10 and is not mentioned as a junk fee anywhere on the internets, so I'm not too concerned about it.
posted by allelopath at 7:28 AM on January 21, 2007