Junk Fees
Nebulous charges assessed at the closing of a mortgage that go to the originator or lender but serve little function. These fees are hidden in the mortgage documents and are usually assessed as raw dollars rather than "points" or a percentage of the loan. Junk Fees may or may not pay for an actual service to the borrower, but they typically are not known to the borrower prior to signing. Some common fees that may be considered junk fees include settlement fees, signup fees, underwriting fees, funding fees, translation fees and messenger fees.
Also known as "padding fees". Investopedia Says:
The idea behind junk fees is that at the end of the mortgage signing process, the borrower is already committed to signing the loan and will not walk away from the table. Junk fees, however, may not necessarily be noted in the good faith estimate the borrower receives a few days prior to closing.
Most junk fees are nominal compared to the points and other major closing costs. Related Terms:
Closing Costs
Good Faith Estimate
Mortgage Broker
No-Fee Mortgage
Origination Points |