Eliminating mortgage lender fee surprises

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(This is Part 2 of a four-part series. See Part 1: Real estate settlement services take bite out of borrowers; Part 3: Mortgage brokers struggle with consumer distrust and Part 4: Cost consolidation improves real estate loan shopping.) The first article in this series indicated that third-party settlement services are overpriced because borrowers paid for them but lenders selected the service provider. Lenders generally use their referral power to benefit themselves rather than to drive down prices to borrowers. The remedy is to eliminate referral power through the adoption of a simple rule: Any third-party service required by lenders must be paid for by lenders. This article is directed toward lender fees, sometimes referred to as junk fees. These are fees charged by lenders to cover specific lender costs. They are defined in dollars, as opposed to points, which are defined as a percent of the loan. Where points are one number, junk fees can be a whole bunch of numbers, each cove...