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Pricing RESPA Fees

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Question: 
Regarding RESPA: I need to know what is the "proper" way to base fees on mortgage loans so that we do not violate any laws. Is it proper to base "points" (we are the mortgage broker in these cases) on the amount of the loan request? I think it is, instead of based on the interest rate. For example: Up to $150,000------1% $150,000 to $300,000------.75%Over $300,000-------.50% I think that is a safer way to price, rather than basing the fee on the interest rate (higher rate = higher fee)
Answer: 

Basing your fee on the amount of the loan is more acceptable to HUD than basing the fee on the interest rate. There is no clear or safe answer here, even though HUD has acknowledged it as an industry practice and an acceptable method for calculating fees. However, nothing, not even that view by HUD, gets you away from the requirement that work must be performed to justify the fee and the work must be appropriate to the amount of the fee.

First published on BankersOnline.com 2/5/01

First published on 02/05/2001

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