Watch out for sneaky mortgage fees

My Bitter Half was reading excerpts from this article on mortgage loan fees to me the other day. It soon became clear to me that we were slapped with just about every fee in the book on our last mortgage. I can't prove it (yet!) but I even suspect they charged us for stocking the paper towels and sweet & low in their break room.

I don't want that to happen to you, so I'm going to share some of the points from this article that I found to be invaluable for those shopping around for a mortgage. (In this day and age, you are very brave indeed.)

• Make sure you get your good faith estimate.

A document called the good-faith estimate, or GFE, is invaluable when shopping around. The lender is required to furnish a GFE within a few days of your application. Like a library using the Dewey Decimal System, the GFE is arranged in numbered sections. The 800s and 1100s are the sections to concentrate on when you compare and negotiate.

The 800 section denotes the lender's fees. For example, 801 is the origination fee, 804 is the credit report fee and 808 is often the broker's fee. The 1100s denote title fees (among them, 1102 for the title search and 1108 for the title insurance premium).

• Question every cost

"You don't just have to take it," says Christopher Cruise, who trains mortgage brokers and loan officers. "If it says 'administrative,' or 'doc prep' or 'miscellaneous,' it's just pure junk."

Even mortgage executives, when e-mailing among themselves, refer to these fees disparagingly. According to the August issue of Conde Nast Portfolio, Countrywide executives referred to some fees as "junk" and "garbage." When ordering a low-cost mortgage for a politician, the executives would specify "no junk" or "no garbage fees."

Ordinary consumers didn't get the same consideration.

• Beware of double-dipping

Sometimes a broker will charge an origination fee (line 801) and a broker fee (usually line 808). "It's the same thing!" Cruise exclaims.

The 1100 section of the GFE, for title charges, warrants scrutiny, too. If any fee seems unjustified, ask that it be waived.

• Compare estimates

It's easy to get hung up on the individual fees and lose sight of the bigger picture. Different lenders give different names to their fees. That can be confusing. To simplify things, compare two or more estimates by adding up the dollar figures in each GFE's 800 section and compare those subtotals with one another. Do the same with the 1100 sections. If any subtotals stand out as unusually high or low, ask why.

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