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Not All Fees Are Bogus

January 13, 2002

"Junk Fees Are What's Behind That Great 'Low Rate'" (by Kenneth R. Harney, Dec. 16) appalled me. It started out somewhat informative and then turned into a misinterpretation of so called "junk fees."

The blanket interpretation of junk fees for third-party professional services is biased. I agree that there are some fees that fit under the category of pure junk fees, however, most are not.

Someone has to pay for Fannie Mae and/or Freddie Mac requirements that apply to the majority of conforming and nonconforming loans. These are third-party vendor services, which can include appraisals, credit reports, escrow services, title insurance and notary services fees, among others. These are not free services. On a typical $150,000 loan, this can easily amount to much more than $1,500. Brokers don't pocket these fees. How can anyone call a third-party service fee a junk fee?

Some of the other fees noted in the article as junk fees apply to a reasonable profit and overhead expenses. Mortgage brokers make a living at providing a needed service to homeowners and potential buyers by charging an origination fee. Why do you think we originate the majority of all loans in the United States? It's low interest rates and need, not greed. And who is going to process the loan or underwrite it? If the broker doesn't, the lender will.

All lenders charge some sort of lender fee to the broker for underwriting the loan risk and validating the borrower's documentation.

A junk fee does absolutely nothing for the borrower. Such fees to look out for are application fees, funding fees, administration fees, warehousing fees, among others. These fees are charged to the borrower for no reason but pure profit.



Quinteros is president of Pacific Home Loans.

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