The 2.5% origination fee may just be the highest lender paid amount that the broker has with their investors per their agreement. A broker can agree to go down on their origination fee (borrower paid transaction). they just can't go up on the set percentage amount that is agreed upon with their investors when doing a lender paid transaction. They may have quoted you that fee also taking into account a broker credit of the same amount, showing a wash-out of the origination fee. meaning a no-cost loan. If they did, then they probably did that in order to not violate the RESPA Zero Tolerance rule (see below). Remember. it's not okay to exceed the initially quoted fees come closing time but it is okay for fees
to go down (because that's in the consumer's favor).
Zero tolerance category (e)(1): This category of fees is subject to a zero tolerance standard. The fees estimated on the GFE may not be exceeded at closing. These fees include:
● The loan originator's own origination charge, including processing and underwriting fees.
● The credit or charge for the interest rate chosen (i.e. yield spread premium or discount points) while the interest rate is locked.
● The adjusted origination charge while the interest rate is locked.
● State/local property transfer taxes.
Ask the broker to go down on the origination fee. They can. and they will if they want to keep your business. Best of luck!!
- December 19 2014