Mortgage Lenders May Charge Extra Fees

Added December 14, 2001 by Ilyce R. Glink

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Summary: When you're applying for a mortgage loan you need to look out for extra fees that mortgage lenders may charge. Some of these extra fees, such as extra money toward credit reports or appraisals, are illegal under RESPA, the Real Estate Settlement Procedures Act. Learn more about what mortgage fees to watch out for here.

WGN-TV Show Notes -- December 14, 2001

ANCHOR: Fees, fees, and more fees. That's the story when you're getting a mortgage.

ANCHOR: If you're not careful, your lender might slip in a fee that's not quite legit. Money and real estate expert Ilyce Glink is here with the details on how to avoid getting ripped off when you finance or refinance a home.

GOOD MORNING

ILYCE: There are plenty of legitimate ways for mortgage lenders to squeeze a few more bucks in fees out of you when you apply for a loan, including application fees, discount points and document preparation fees. But some lenders charge fees that constitute violations of the Real Estate Settlement Procedures Act, or RESPA, and if you don't watch out, it could happen to you.

Illegal Lender Fees

Lender pays $30 for credit report - you pay $100

Lender pays $250 for appraisal - you pay $400

You choose a title company not owned by the lender - you pay $300

ILYCE: Under RESPA it's illegal to charge for a service that isn't provided or to mark up a fee charged by a third party, like a pest inspector or credit bureau. Other charges that can't be marked up include appraisals, settlement or closing costs, credit reports, flood certifications, pest inspections, postage and courier costs, surveys, title insurance and title work.

"Lenders don't have a right to collect illegal kickbacks and unearned fees"

Mel Martinez, secretary of HUD

ILYCE: As Mel Martinez, secretary of the Department of Housing and Urban Development says, lenders can be reasonably compensated for their services, but they don't have a right to collect illegal kickbacks and unearned fees.

ILYCE: If your lender is collecting illegal fees, you should report the company to HUD immediately. But the best solution is to avoid being ripped off in the first place. How do you do that? Shop around.

Dec. 14, 2001.

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