The settlement agent can be a title company rep., an escrow agent (common in the West), or an attorney (common in the East). It is your choice, as a buyer or as a home owner refinancing.
Over the past seven years or so, more and more settlement agents are adding junk fees to their closing costs. It seems like they’ve said, “Hey, look at all these lender junk fees! Let’s see how I can pad my own profits by adding a few of my own.”
Then once one well-known company adds bogus fees, their competition sees it as a green light to jump on the bandwagon. It’s disgusting the way greed grows like a toxic black fungus.
Fortunately, there are good, ethical closing agents who do not charge extra for their services. I encourage you to choose these agents and help clean up the business by starving out the greedy ones. It is YOUR choice which settlement closing agent you use. (Per the Real Estate Settlement Procedures Act, Section 9)
To help you, here is my personal list of fee pet peeves.
Unnecessary or Bogus Fees I Don’t Want to See From a Closing Agent (alphabetical order)
* Archive or filing fee (You shouldn’t pay extra for their filing system. That is part of being in business.)
* Courier or messenger fee (Getting the signed documents back to the lender is part of what the closing agent’s large fee should cover. Moreover, FedEx and UPS, the services most agents use now, charges about $40 to overnight documents, so they shouldn’t show a padded fee of $60 – $100, as they often do.)
* Document preparation fee (Preparing the closing Settlement Statement and a handful of other boiler plate forms is what their main big fee covers. Adding this is redundant and borders on dishonest, in my opinion.)
* Email or edoc fee (They don’t need to charge you $50 to $150 to receive the documents from the lender by email. That is part of their normal job.)
* Wire fee (While banks do charge a nominal fee to wire funds, none of the good settlement agents tack on this fee for their clients. They figure it is part of what their big fee covers.)
Fees that are not junk are title insurance, title search, endorsements, loan tie-in, or other reasonable and customary title fees.
Here is a copy from an actual closing statement from a loan in California, $625,000 loan:
Closing/Escrow Fee ESTIMATED $ 1,300.00
Notary Fee $ 125.00
Lender’s Title Insurance ESTIMATED $ 799.00
Endorsements $ 75.00
Courier / Messenger $ 65.00
E-Doc Fee $ 75.00
Loan Tie In Fee $ 150.00
My Comments: Evidently, this escrow settlement agent doesn’t think $1,300 is enough to make for their services. They are adding a $65 courier/messenger fee and a $75 email fee. If I were that borrower, I would either insist that the extra $140 be waived or I would choose a different closing agent. In addition, if I did not require a notary to come out to me, because I would sign in the agent’s office during normal business hours, I would ask for the notary fee to be waived.
If you see another garbage fee, please send me a message via my Ask a Question page or comment on this post at the top right. If you would like to recommend or warn about a good or bad closing agent, please let me know, because I am keeping a list.
Let’s all do our part to clean up the mortgage industry — including the closing side — by giving our business to the good, ethical agents.
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