Beware of junk fees on home equity loan

DEAR BOB: After reading your recent list of”nonsense” mortgage junk or garbage fees some lenders try to impose,when I recently applied online for a home equity loan I realized I was about tobecome a victim of a major lender. The lender wants to charge me a loanorigination fee, appraisal fee, credit report fee, processing fee, underwritingfee, flood certification, funding fee, $100 escrow settlement fee, $150 titlefee, $15 courier fee, $15 wire fee, $75 recording fee, $80 intangible tax and$235 mortgage tax. What is your evaluation of these charges for a home equityloan? –Marydelle P.

DEAR MARYDELLE: Most of those are unnecessary junk fees youshould not pay.

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Virtually every local bank and credit union will eagerlymake you a home equity loan or home equity credit line (HELOC) without any junkfees if you have a FICO (Fair Isaac and Co.) score around 700 or higher.

I have obtained many home equity credit lines over the yearsfrom major lenders, such as Chase and Wells Fargo, without paying any up-frontjunk or garbage fees such as those you list.

The only legitimate home equity loan fees on your list thatI wouldn’t resist are the local mortgage tax, the intangible tax (whatever thatis), and the recording fee. The other charges you list should be absorbed orpaid by the home equity lender if they want your business.


DEAR BOB: I am a longtime independent mortgage broker formore than 20 years. My business comes 100 percent from satisfied formerborrowers and real estate agents who know I will treat their home buyers right.If I can’t arrange a mortgage for a specific situation, I tell the prospect quicklyand we part as friends. Often, I know of “secret lenders” who willmake mortgage loans not available elsewhere. However, I always reveal theborrower’s costs up front, never imposing any last-minute junk or garbage feesas some of my dishonest competitors do. Congratulations for exposing thosefees, which nobody else writes about –Jonathan C.

DEAR JONATHAN: I wish your mortgage brokerage services wereavailable in every city. Why don’t you open a nationwide franchise chain”Honest Mortgage Brokerage?”

It is refreshing to hear from an “honest mortgagerbroker” who doesn’t trick borrowers at the last minute when they are mostvulnerable and will pay unnecessary loan fees when they have no other choice tolosing their home purchase.

I frequently recommend experienced mortgage brokers like youwho can often arrange “impossible” mortgages for home buyers withunique situations. As long as the fees are disclosed up front, borrowers canthen decide if they want to pay the expenses or not. ??

What especially irritates borrowers is when their loancharges are far higher than were disclosed on their so-called “good faithestimate” which we both know is a joke because there is no enforcement.


DEAR BOB: Thank you for your article some time ago aboutreal estate sales commissions. The home sale market in our town has been slowsince January. Our listing agent, a trusted family friend, warned us home saleswere slow so we listed with an asking price about $5,000 below market value.That didn’t work. After two months, she suggested we raise our sales commissionto 7 percent with 4 percent to the selling agent. It worked like gangbusters!Within a week, we had two purchase offers. We accepted the best one and tookthe other as a “back-up offer.” Our home sale recently closed.Although we paid a higher than normal sales commission, we got an all-cash salefor almost our full asking price. Thanks for that great advice to raise thesales commission –Durk H.

DEAR DURK: In your situation, it was obviously moreimportant to get your home sold than to net the highest possible sales price.Not all home sellers are so highly motivated.

Some home sellers prefer to cut the sales commission by oneor two percent and wait “forever” to get their homes sold. Obviously,selling your home was more important than squeezing the last dollar from thesale.

The new Robert Bruss special report, “Probate PropertyProfit Secrets Revealed,” is now available for $5 from Robert Bruss, 251Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instantInternet delivery at for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center

Copyright 2006 Inman News

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