As a realtor, what fees do you view as junk fees charged by the lender?

Processing fees, application fees, wiring fees, overnight fees, all the junk fees which nickel-and-dime the cost.
Junk is just a term, though - I don't think it is meant to imply that the fees shouldn't be charged or are worthless. It's just what they're called.
I have one item on my investment analysis that could be called junk fee, and the escrow company has a few junk fees too.
--A

People send us their GFEs to review. I have seen junk fees being charged by both lenders and brokers.

People tend to think that clients get better deals going through a direct lender but that's not necessarily so.
One lender (big one too!) was charging the client $3,000 more than a broker. They collected 3 processing fees (1 is fine because processors do have to get paid too), 1 application fee ( which is BS if you asked me). They had a credit analysis fee (????), a commitment fee (!$#@%), and all kinds of stuff like that. Needless to say, it wasn't a good deal at all! The client was promised $3,500 in closing costs on a $320,000 loan amount, but the total came to $4,900 (before per diem interest). So a big name doesn't always mean the client gets treated fairly.

I've seen Title company charge junk fees as well, what on earth is a "sub-escrow fee"? There is an escrow fee already so is there a need for a mini-escrow fee? Come on! I've seen notary fees for $150, WTF?!?

I've seen brokers charge underwriting fees (BS fee!) because it is part of our job as LOs to underwrite the file anyways. Pre-approvals are issued based on the file being underwritten and we get compensated with the origination fee anyways. I've seen courier fees of $100, I say give the client the choice of the method of delivery and the option to save money. Not all packages are sent overnight. We do a lot of business with fax machines and e-fax which saves a lot of money for the clients.

I've seen lenders and brokers put a markup on credit report fees, which is illegal.

The morale of the story is that as a realtor, it is very important that you build relationships with lenders. Relationships that are RESPA compliant, based on trust, and most importantly relationships that are client-centric. Understand your culture, set the bar high when it comes to ethics. When all parties involved in the transaction are capable of looking beyond the commission check and share the goal of earning their clients' referrals: everybody wins.
You will see that junk fees are not on GFE's, clients are treated fairly all the way through, and everybody's job becomes easier and more enjoyable. Not only that but all parties expand their referral base because the word gets around that our clients' home buying experience was nothing short of remarkable.

Your clients deserve the best loan they can get and the peace of mind that they will be able to afford the home they just bought, not only today but for years to come.
As a realtor, you deserve to get the support that you need so that you can focus on servicing the client instead of worrying about how much junk fees your clients is going to be charged.
As an LO, I deserve the peace of mind that my clients' realtor is not going to pressure them into buying a home that is out of their price range just because "the difference in payment is only $50.00" ($@%$#) To some people, $50.00 can make the difference between keeping their home and selling it a few years down the road. (I am in CA, homes are expensive as it is and people already have the tendency to over-extend themselves financially because prices are so high). I need my realtors to care about our clients' financial well-being as much as I do and they do, because I work with agents who have the same culture and ethics as me.

As a realtor, you will receive tons of phone calls from lenders wanting to work with you. Take the time to interview them. Find a few who are genuinely interested in adding value to your business, want to find out how they can help make the home buying process smoother and more efficient for your respective clients. They should be thinking long-term and referrals. A successful realtor/LO relationship will see increased business with little effort made. Remember not all realtors and loan officers are created equal so it is important that you write down your mission statement (how do you want to be perceived, how do you want to conduct your business...). Never compromise your integrity and never associate yourself with people who don't have their clients' best interest at heart. They are very easy to identify, trust me.
If you need help with that let me know. Solid relationships are everything in this business.

A sub-escrow fee would be a *crap* fee to me, but around here we throw around the term junk fee quite a bit.
--A

Hey Alea,

I can't believe you wrote that whole thing and left out the one thing that IRKS me about LO's and Brokers in addition to the junk fees. YOUR REBATE OR YIELD SPREAD!!! How about not charging that in addition to the 1%

Now I understand the YSP or REBATE has its place, BUT when you charge a client 1% THEN DON'T DISCLOSE the BACK END that is as bad as all the junk fees you wrote about. Now I also understand that in the case of brokering out the loan you are obbigated to disclose the YSP on the HUD, BUT there are a lot of direct lenders or Brokers with wholesale lines of credit who simply do that just to get around not having to disclose the YSP.

When I recommend a client to a lender I always make sure I get a copy of the wholesale broker ratesheets. I tell my clients ALL ABOUT THE JUNK FEES AND YSP. This is real realtor customer service. I have saved my clients THOUSANDS in Lender fees and YSP's.....

"When I recommend a client to a lender I always make sure I get a copy of the wholesale broker ratesheets."

Rick,

Who do you work for? Agency name.

It doesn't matter... stick to the topic. This is how topics get OFF topic. Irrelevant questions. Besides, the REPLY wasn't directed to you, it was to the previous long winded poster.

Rick,

I assure you any REBATE has been disclosed. You just need to learn what to look for. If you are a Real Estate "Agent" and you don't know where it is then how are you going to point it out to your buyer?

Wow, you guys are seriously confused. I do however agree with certain portions.

First off if the YSP is not disclosed, this would be a correspondent transaction and is not required to be. Processing and underwriting fees are not "junk" fees. The processor and in house underwriters need to get paid as well. See as a broker/lender/banker if you have, say 150mm warehouse line, the loan will be closed in your companies name, there will be two transfer of assignment disclosures signed at closing or we may decide to service the loan for a period of time and then sell them in bulk.

The types of financing and financial aspects are way to complex and detailed to go in to at this point as I don't have enough time to get much further in to it, but how can you sit here and pick apart fees we charge, some of which you singled out as fees I have to pay my processors and underwriters, while you are sitting there making 6 - 7% Our job is far more complex.

A little knowledge is dangerous. That's the point I want to make to Mr. Mense... who thinks he understands everything but doesn't. AZLender is right... it's more complex then people realize... however some companies abuse the system and charge too many fees.

One other thing I forgot to mention. The financial aspect of the transaction is proprietary information solely between us (lender) and our client. Most realtors are not well educated or experienced enough to give financial advice, thus confusing the consumer. There should be a very hard line followed. You dont see us telling the borrower to use this particular realtor because you'll save $X.

It's understandable you are looking out for the clients best interest, but so are we. Granted, there are a few exceptions to that rule, but that applies in any industry.

You have to have a certain level of integrity, ethics and morals otherwise you are going to end up looking like an idiot to your client. There is a reason you do not handle the financing. It's a whole different animal.

Here is a list of actual fees: (not junk)

Lender

Processing
Underwriting
Credit Report
Appraisal
Flood Cert.
Lender Fee

Title: This will vary by Title Company

Closing Escrow
Title Ins.
Doc. Prep.
Recon Tracking
Wire Fee
Attorney Fees (if in a state which requires this)

Government Fees:

Recording
Tax Stamp

Then you have your prepaids:

Hazard Insurance (Homeowners)
Real Estate Taxes
Mortgage Insurance (if applicable)
Flood Insurance (if applicable)

Personally, I only charge an Underwriting and Processing fee (under lender fees) to pay, my processors and my in house underwriter. I consider the credit report a cost of doing business.

Listed under those fees are costs we actually incur. If we aren't charging them we still have to pay them. This would be out of SRP or YSP, yes there is a difference between the two.

Rick works for Agitators Anonymous...ask him...he won't answer everytine

or time

I didn't include YSP in my junk fee list because as an upfront mortgage broker, I always disclose it to my clients and give them the choice of getting the wholesale rate by paying the origination fee. I get either/ or, never both. I still get compensated fairly for my service so it is not an issue for me.

But I agree, not disclosing the YSPs is a complete conflict of interest. Clients appreciate the honesty and compensate accordingly for it by not fighting the FAIR origination fee that I charge.

I also agree with AZ Lender. Real Estate should be a team sport. I would never backstab the agents I work with by second guessing my agent partner's expertise and make him or her look like an incompetent bad guy. Successful relationships are based on trust and mutual respect with only one goal in mind: to make the client happy that they chose to do business with us. I really hope that all of you trust your lender partners to treat your clients as faily as you do. If not, it is time to severe the partnership and find another who will provide you the support and peace of mind you deserve.

"I didn't include YSP in my junk fee list because as an upfront mortgage broker, I always disclose it to my clients" by Alea, CA


That goes without being said with any ethical mortgage professional.

Well nice to meet you AZ "high integrity" Lender.

Likewise....Alea (upfront broker). I respect the content in your posts and appreciate you appear to be looking out for the best interest of your clients.