We make secondary market loans. Our investor requires the origination fee include the flood fee rather than breaking the flood fee out in block 3. Block 1 instructions states that oringiation fee includes all charges performed by or on behalf of the lender or broker and includes . . .obtaining verfications (among other things). Is anyone else doing it this way? Thoughts?

We do not put the flood fee in Block 1. We break it out in Block 3. I would follow up with your investor to find out why they want you to do this.

If your flood fee is paid to a 3rd party vendor, it does NOT belong in Block 1.

From the FAQ

What services belong in Block 3, ―Required services that we select‖?
A: Block 3 of the GFE contains the charges for all third-party settlement services (except title services) for which the loan originator requires and selects the provider of the service. Examples of these charges for services generally include but are not limited to, appraisal, credit report, tax service, flood certification and up-front mortgage insurance premiums.

Just because i faced this same issue before, i offer this advice for whatever it's worth: make sure it's the investor actually requiring that and not just your secondary market LO *saying* that's what the investor is requiring.