The fee lines refer to the individual fees and charges associated with obtaining a mortgage loan. Fees must be listed in the appropriate section for transparency and so they can be accurately considered in certain fee tests to make sure we are in compliance.
As the name implies, fees described as “Items Payable in Connection with Loan” are those fees that are charged to cover expenses originating as part of processing the mortgage loan.
Line 801 Origination Charges are related to our fees as the lender. They can include the origination fee, processing fee, underwriting fee, document preparation fee or administrative fee. Certain states have rules against charging certain fees.
Loan Origination Fees: This is a general lender fee that is added to some mortgage loans utilizing a specific loan program (see Fee Chart) or are simply charged in a specific area of the county.
Processing Fees: This fee is intended to compensate the lender for the expenses associated with gathering the necessary documentation to send the loan to the underwriter for a credit decision and for reviewing documentation the underwriter requests.
Underwriting Fees:This fee covers the lender's costs associated to an underwriter reviewing the file to ensure it meets loan program guidelines.
Document Preparation Fee: This fee is assessed to cover the expenses associated to disclosing and closing the loan.
Line 804 Appraisal Fee is applicable to all loans without a Property Inspection Waiver (PIW). The appraisal determines the estimated market value of the borrower's home. This is then used to determine whether the property is sufficient collateral for a loan. See the Fee Chart for how much should be charged up front. This fee will change based on the location of the property, type of property and possibly the complexity of the property.
Line 805 Credit Report fee is a charge for the client’s credit reports. This will vary depending on the number of borrowers on the transaction as well as additional requests like credit supplements.
Line 806 Tax Service fee is a closing cost that is assessed and collected by a lender to ensure that mortgagors pay their property taxes on time for the first few months.
Line 807 Flood Certification fee is required by lenders because it determines whether the property is in a flood zone and requires special flood insurance.
Line 808 Verification of Employment fee occurs when a 3rd party vendor like Equifax’s The Work Number is utlized to verify employment dates and income information for a borrower’s employment.
Other fees you will find in this section (typically in lines 808-835) include:
Compliance Fee – This is typically charged on files that utilize a Down Payment Assistance program. The program administrator will charge this to review documents to ensure compliance with regulatory requirements and program requirements.
Condo Questionnaire – The Condo Questionnaire is a fee charged by the Condo Homeowner Association to obtain information about the status of the association like how units are in the project and how many units are delinquent on HOA dues.
Condo Desk Fee - The Condo Desk reviews the Condo Questionnaire and corresponding documents to determine if the condo project meets loan program requirements.
Reinspection Fee – This is an appraisal fee that’s charged if the property did not initially meet loan program requirements and the appraiser has to go back to the property to reinspect it.
Engineer Cert – This is a charged associated to Manufactured Homes
IBTS Report - This is a charged associated to Manufactured Homes. It verifies manufacturer information in lieu of a missing certification label/HUD Plate.
These items are expenses that lenders require borrowers to pay in advance before the loan is closed. These are they type of charges that are typically collected out of the monthly mortgage payment but cover the time from when the borrower first takes over until the date of the first mortgage payment.
Line 901 Daily Interest Charges covers the interest charged on the principal loan from the closing date until the first mortgage payment.
Line 902 Mortgage Insurance Premium is a charge for FHA loans. This is the one-time upfront Mortgage Insurance payment, not to be confused with the annual mortgage insurance payment that the borrower pays monthly. It provides the mortgage lender with some protection in the event that the borrower defaults on your loan.
Line 905 VA funding fee is a one-time fee charged for VA loans. The fee is a percentage of the loan amount and varies depending on factors such as the borrower's military service category, down payment amount, and whether it's the borrower's first VA loan. These determining factors can be found on the VA Certificate of Eligibility (COE) form.
Reserves Deposited with Lender refers to funds that a borrower may be required to deposit with the lender to establish an escrow account that pays for property taxes, homeowners' insurance or mortgage insurance. This account is managed by the lender to hold funds for the payment of recurring expenses. It acts as a centralized repository for funds, ensuring that these expenses are paid on time.
Cushions and due dates for these expenses are input in the Aggregate Setup next to Line 1011.
Borrowers under certain conditions can waive the need to have an escrow account.
In the Title Charges section (line 1100), there are a wide variety of fees that are collected by the Title Insurance Company or Escrow Company. The fees are imported from Smart Fees at initial disclosure and are updated during redisclosure/CD based on the estimated settlement statement.
The title company conducts title search which is researching the history of ownership of the property as well as any liens or claims against the property. The title company acts as a neutral third party that ensures the transfer of property ownership is valid and that the lender's interests are protected. Here are some of the fees and an explanation of what they cover:
Title Endorsement - Title insurance endorsements add additional protection by modifying some exceptions or adding property-specific coverage to the current policy.
Survey Fee - This determines land boundaries and building locations.
Title Examination - The task of checking official records about a property, to discover who its legal owner is and to make certain that nothing is owed on it.
Settlement/Closing Fee – The fee charged by the settlement agent for providing services to close the loan
Closing Protection Letter (CPL) - An agreement from a title insurance company designed to protect the lender against issues that might arise from non-compliance with lender written closing instructions, fraud or negligence
Notary Fee – The fee a Notary Public charges to verify identity, sign and travel expenses
Courier Fee – The charged to delivery documentation
Owner’s Title Insurance - Owner's title insurance provides protection to the homeowner if someone sues and says they have a claim against the home from before
Lender’s Title Insurance - Protects the lender against problems with the title to the property-such as someone with a legal claim against the home.
eRecording - The fee charged for registering or recording a real estate purchase or sale, so that it becomes a matter of public record
This section contains city/county/state recording charges for registering or recording a real estate purchase or sale, so that it becomes a matter of public record. It also contains the Transfer Tax charge (if applicable in that region) which is a charge the city/county/state charges when the property changes owners.
This section contains a variety of fees that don’t fall into one of the previous categories. Some examples of fees are Real Estate Transaction Fees, Home Buyer Education Fees, Home Warranties and HOA documentation fees.