Hello,
I paid an $350.00 application fee upfront for my mortgage. But on the committment letter from the bank, I see an origination fee of $221.88 which will probally be on the settlement charges. Both of these fees seem "one and the same".
Are They?
How does one determine fair settlement charges by the Bank and the Title company? I live in Pennsylvania.

I have no business answering a Pennsylvania Question . . . . but I will take a stab at it, since over 3 hours have passed since you asked.

Here, the initial Application Fee covers the initial Credit Check, Employment Verification and the Appraisal on the property.

To get Customers, many Lending Institutions are waiving some or all of those initial Fees and catching up with you later, when you're more of a "captive audience".

Do you see any of those earlier Fees also delineated elsewhere ?

All I have now are good faith estimates from the bank and the real estate agent. I thought I may be able to question some mortgage and closing costs if I had some figures to work with like:
A percentage of the sale of house or a common fixed amount based on the mortgage amount etc.
I see nothing delineated. It seems the banks and title companys are free to charge whatever they want.
One good thing will come out of this as the bank I chose for my mortgage gave me a better deal then my own "Credit Union".

Origination is a charge from the lender. It is strictly a fee paid to the lender. Having this charge usually will get you a lower interest rate. It depends on the lender.


The 350 is likely the fee for the cost of the appraisal. THat is what it is most commonly used for. In some cases it also may cover a credit report fee if permitted in your state.

They are more like "Backend Loads" but unlike the mutual fund industry, the customer learns about them after he is committed to a fixed interst rate and already has a set time for settlement. There should be a law that all banks list complete fees. But if I am wrong and they do; then that 221.88 fee may be a mistake. My real estate agent is looking into it. I believe she is a seasoned agent and I just wonder why she does not know the differance between application and origination fees. They still appear one and the same to me.
I am a retired firefighter and she was recommended to me by other firefighters; so I feel comfortable with her performance so far. I should know more before the weekend is out.

Ok,
The reason for the so called origination fee of 221.88 was an additional fee added on because I waived escrows for insurance and real estate taxes. Well at least I get some of it back in interest while it all sits in savings until due.

Good for you! On my 1st House, the Lender had me perpetually pre-paid for a full 5 months in advance, and then they always waited until 48 Hours before my Taxes were due in order to pay them. Once I discovered that this wasn't really necessary, that ended that . . . . no more interest free loans.

But I learned a good lesson from them, and just like the Japanese manufacturing and inventory control systems, I pay everything JIT (Just-in-Time).

So you apparently put down 20% or so to be exempt from the escrowing, but I don't understand the rationale behind $221.88 charge they imposed for NOT having the privilege of holding your money for you . . . . which is very kind of them.

there IS a law!!

origination and application fees are not the same.

There should be no hidden or "backend" fees that are not disclosed within 3 days of the lender receiving a completed application for a loan. This is federal law. The Good Faith Estimate rules now in effect call for certain fees to be 100% accurate and others are given a tolerance of around 10%. The point of the rules is that borrowers no longer get hit with surprise fees and costs at closing that were not completely disclosed ahead of time.

In theory the GFE you receive could also be used to shop around for a better deal from another lender, but most borrowers find them too confusing and have no real idea how to read and compare them.

There is a difference between an application fee and an origination fee. Usually this is seen when you get your loan through a mortgage broker rather than directly from a lender. The application fee is often a fee that the broker charges where the origination fee is charged by the lender.

One thing I would caution any borrower about is paying any cash up front to a mortgage broker. It is common for borrowers to pay for the appraisal, but that should be paid directly to the appraisal company, not the the mortgage broker.

The 221 is called an escrow waiver fee. They charge this fee because those who do not escrow have a higher satistical history of defaulting on their mortgage. Also, when these people who do not escrow fail to pay their property taxes the lender usually has to pay them to avoid tax foreclosure.