Posted By: swiggles
RESPA - Origination Fee - 07/25/02 07:18 PM
I'm bumfuzzled and need some help in sorting this out. I'd like to have all my eggs in the basket before calling the loan officer. Here's what happened.
Consumers (husband and wife) applied for a loan to refinance their principal residence. GFE was given, the loan was approved and papers were drawn and sent to the title company. Communication then broke down between the holder of the loan and my bank....refusal to quote payoff without the borrowers' written consent, among other things. It took a number of phone calls and jumping through various other hoops to finally get the payoff quote. During this time, the borrowers made another payment. The officer decided to charge an origination fee on the loan and the borrowers agreed. The origination fee "just happened" to be the difference between my bank's loan amount and the new payoff from holder of the note thus eliminating the need for new papers to be drawn up. It appears, as a result, that the origination is financed i.e. it's part of the principal of the loan. Since an origination fee is a prepaid finance charge already, is it legal to finance it and charge interest on it.
Give me your thoughts about this mess.....please.
Consumers (husband and wife) applied for a loan to refinance their principal residence. GFE was given, the loan was approved and papers were drawn and sent to the title company. Communication then broke down between the holder of the loan and my bank....refusal to quote payoff without the borrowers' written consent, among other things. It took a number of phone calls and jumping through various other hoops to finally get the payoff quote. During this time, the borrowers made another payment. The officer decided to charge an origination fee on the loan and the borrowers agreed. The origination fee "just happened" to be the difference between my bank's loan amount and the new payoff from holder of the note thus eliminating the need for new papers to be drawn up. It appears, as a result, that the origination is financed i.e. it's part of the principal of the loan. Since an origination fee is a prepaid finance charge already, is it legal to finance it and charge interest on it.
Give me your thoughts about this mess.....please.