Is this a valid CC to increase Origination Fees?

Posted By: Kelsey D

Is this a valid CC to increase Origination Fees? - 07/11/13 01:51 PM

A borrower applied for a 20 yr fixed rate mortgage to refinance and consolidate a 1st and 2nd mortgage. The appraisal came back too low to cover both, so we denied/countered with a lower amount to refinance just the 1st mortgage. The borrower accepted, and we redisclosed the GFE. Despite the loan amount decreasing, we increased our origination charge because our delivery fees went up due to the 2nd mortgage (3/4% to 1%). Is this okay since we countered and they accepted, or is it not okay since the product technically did not change (still a 20 yr Freddie)?
Posted By: Truffle Royale

Re: Is this a valid CC to increase Origination Fees? - 07/11/13 02:19 PM

Your only CC was the loan amount decreasing.
Any fees related to decreasing the loan amount would be valid.
Posted By: Kelsey D

Re: Is this a valid CC to increase Origination Fees? - 07/11/13 02:25 PM

The origination fees went up, not because of the decrease in the loan amount, but because the low appraisal caused the second mortgage to not get paid off. Am I understanding you correctly that the situation I described is NOT a valid CC for increasing the fees?
Posted By: Kelsey D

Re: Is this a valid CC to increase Origination Fees? - 07/11/13 02:36 PM

Let me add this. The rate was not locked when the initial GFE was provided. The rate locked when we issued the new GFE with the lower amount and increased fees. Does the rate lock factor in at all?
Posted By: Truffle Royale

Re: Is this a valid CC to increase Origination Fees? - 07/11/13 02:46 PM

Absolutely!
Delivering with this loan amount at the rate locked is what incurred the additional fee.
You should show that in Block 2 on the line that reads 'you pay a charge of $_____for this this intrest rate of ____. This charge increases your total settlement charges.'
Then you put the additional cost out in the column and total it in A.
Posted By: Kelsey D

Re: Is this a valid CC to increase Origination Fees? - 07/11/13 03:05 PM

Thanks!