I mentioned in a previous post that home buyers/borrowers will need to be on their toes as lenders will be trying to maximize profits from each transaction, at least in the foreseeable short term. The only way to know what you are being charged is by carefully reviewing your HUD [“Housing and Urban Development”] statement that you receive from your escrow agent. Sometimes, questionable fees may appear. Don’t be cowed by an “Administrative Fee” when you are already paying a “Loan Origination Fee”. Ask about the validity of a “courier fee” if you suspect that all of the documents were faxed.
Ken Harney’s article in the Sunday Seattle Times is about this very subject. Surprising to me was the mention of add-on type fees by real estate companies. I have never heard of such a thing locally, but I admit that I am not familiar with the compensation arrangements for anything but traditional full service brokerages.
We make it a policy to attend every closing in person in order to review the HUD statement with our clients. If we are unable to attend in person due to a schedule conflict, we will arrange to obtain a copy of the HUD from the escrow agent prior to closing so that we can at least review it with our client over the phone before they sign closing documents.
There have been many times that we have recommended refuting some fee that was not anticipated. It is rarely a lot of money, but that is not the point. The point is that every borrower receives a GFE [“Good Faith Estimate”] from their lender in advance of closing. If there are to be any variations between a GFE and HUD, they should be thoroughly disclosed and discussed with the borrower well in advance of signing closing documents. Items (costs) that pop up a day or two prior to closing should never be accepted without a complete explanation. Statements such as “these are standard fees” or “this is the way we always do it” will not suffice if the charge was not on your GFE.
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