Home loan junk fees. What an ambiguous term. So many things can be mistakenly classified as home loan junk fees including fees that are bona fide. Mortgage loan fees nationwide amount to roughly 110 billion annually. You may wonder why that figure is so high after all it's just a home loan.
With each loan that funds there are multiple people working to complete the loan. Many of the people involved in the transaction will never meet some of those who assist the loan officer in completing the loan process. This includes
* a loan processor
* escrow officer
* title insurance company
* appraiser
* underwriter
* underwriting assistant
* lenders account executive
* funder
* doc drawer
* county recorder
* courier
None of these fees are junk if they are bona fide meaning normal and customary charges for services performed.
A junk fee, essentially is a fee charged for a service that is not performed.
Home loan junk fees can also be a padded fee for a service that is performed.
Example would be: If recording your deed cost $85 and the lender or broker charged $125, this would be padding fees.
With the housing crises into its second year junk fees fall under a term known as Predatory lending. Lenders are in fear of loan buy backs so they are monitoring these types of charges very carefully.
This is great information for home buyers (and those who are refinancing too!)! With the GFE change - they need to understand!
Nevin, Thank you for the information and I never would have known it takes that many people to work a loan and much respect to your profession for getting the job done!
awesome explanation of "junk fees"!! I have a client closing with an "online" lender next week and cannot WAIT to see where they are at with the junk!
Eleanor - Thanks! That new GFE is a can of worms
Wanda - Thanks so much : ) There are a lot of people involved and if any of them mess up I'm the bad guy so i have to surround myself with people who are commited to their jobs in order to be successful.
Renee - Charging junk fees is predatory lending and the Feds are watching like a hawk. Most likely the fees will be bona fide. Sounds crazy but a lot of fees isn't necessarily a bad thing as long as the customer secured a low rate in exchage for paying all fees themselves. Over the long run they will save much more money with the lower rate. I can look it over if you are ever in doubt, just let me know.
Melissa - Surprised buyers = lousy loan officer (usually). Some LO's tend to not mention pre paid items like property taxes, 1 year insurance that must be paid up front when discussing fees with the buyer. Surprise surprise! You'll need more money! For heaven's sake : 0 LOL