Ten Ways Mortgage Lenders Abuse Homeowners

A survey of common mortgage fee overcharges and mortgage lender abuse for 2006 was released today by the Homeowner’s Consumer Center and their partner, the National Mortgage Complaint center. The survey includes fees to watch for when obtaining a mortgage, as well as standardized fees. While some of the fees charged are not only legal, but necessary, the amount that was charged, or the times it was charged to a borrower, is what to look for. For example, a title research fee is a standard closing cost; but some title companies will include a review fee, which is the same as a research fee.

Lenders often make additional money from a yield spread premium. This is not points paid at closing by the borrower to lower a rate; in fact, it is the opposite. A YSP is a “kickback” given to a broker for increasing a rate to the borrower, making money with the higher interest rate for the lender. The best way a borrower can protect themselves is by requesting a Good Faith Estimate, and reviewing each fee with their agent or another lender.