Susie asked me to write an update about junk fees imposed by settlement agents (title/escrow companies in the West). She has a good point. Fees have changed since I last posted on this topic in 2015.
Here is a snippet from an actual Closing Statement showing what I call “clean” fees, meaning no unnecessary bogus fees added to pad the profits of the settlement agent.
The Lender’s Title Insurance is $827.14
The Escrow/Settlement/Closing fee is a flat $1,186.80
Notice that the Owner’s Title Insurance is blank, because the Seller pays that.
No doc prep fee, no email fee, no FedEx fee, no courier fee, no archive fee.
Fair and customary fees for the purchase price in Washington state. I like it!
This same company, First American, adds two fees that they do not charge in Washington for California. In CA, First American has a “new loan fee,” previously called a “loan tie-in fee.” They also like to add a notary fee, which can be waived if you go into their office to sign loan documents rather than have a notary drive out to your location after business hours–if you ask. I’ve seen them charge a notary fee even when the buyer drove into their office but also waive it when asked.
Why does the same company charge a notary fee in CA but not in WA? Because competing escrow companies in WA don’t charge extra for a notary.
Here is another snippet, this time from a purchase in California:
You see that this unfortunate buyer paid:
Escrow Fee: $1,225
Lender’s Title Insurance: $1,004
Loan Service Fee: $340
Recording Service Fee: $14
Signing Fee: $225
Special Courier Fees: $75
Owner’s Title Insurance: $1,929
My Comments on these Fees
Notice that the Buyer is paying both the Owner’s Title (typically paid by the current owner, the seller) and the Lender’s Title Insurance. Poor buyer paid $1,929 extra!
Loan Service Fee: $340 Added junk fee. What service are they providing that is not included in the title insurance and escrow closing? They are not the loan servicing company.
Recording Service Fee: $14 This is not the recording fee charged by the county, which was $375. It is an added nonsense fee to the escrow company. It’s like buying a hamburger and paying extra for the pickle.
Signing Fee: $225 to sign, even if they didn’t need to hire a notary outside of business hours.
Special Courier Fee: $75 Isn’t that special of them to charge $75 when FedEx overnight is $17.50! And why isn’t their $1,225 escrow fee enough to cover that in the first place?
The $50 Environment Fee at the top of the list is a county requirement, so all escrow companies are required to charge it. It’s not junk and it can’t be waived.
There is a lot more to say about this topic, but I hope by seeing these two examples, you can shop for a good title/escrow company, and then ask your Buyer’s Real Estate Agent to request your preferred company on the purchase offer.
To shop fees, you can use the online fee calculators. Locate them through Google, like this:
First American Title fees + zip code
Chicago Title fees + zip code
Fidelity Title fees + zip code
Old Republic Title fees + zip code
WARNING: If you sign a Purchase Contract that stipulates using a high-priced, fee-laden escrow/settlement company, then you have agreed to their fees. Once signed, you will not be able to get it changed.
Thank you for reading this post. I work hard to help good folks get good pricing on their mortgage loans.
4 thoughts on “How to Avoid Title and Escrow Junk Fees”
PHI Mortgage is giving me a “hard time” with (believe it or not) catchingup on my monthly. I am currently 3 mos. behind with an estimated $2500 by end of month to be all caught up! $2500 Mrs. Warren! I do believe they’re using Scare Tactics but I’m just looking for some “positive ” advice. Can you help?Sent from my MetroPCS 4G LTE Android device
Your mortgage company is not using scare tactics or giving you an unusually hard time. The way the mortgage contract works is this: When you miss a payment (or multiple payments), you must pay the entire balance owed (including late fees) all at once. If you don’t make the entire payment due, then the lender can start the foreclosure process when payment is 90 days past due.
Please take this very seriously, because you are in imminent danger of losing the home.
You should call and ask to speak with the loan modification department. If they don’t have one, ask to speak with a manager who has authority to work out a payment plan. If they refuse, that is their legal right, according to the Deed of Trust you signed at loan closing.
You might also consider selling the home or doing a short sale if there is not enough equity to sell on your own.
I wish you all the best!
Thanks. I have the Mortgage Thing worked out!!Sent from my MetroPCS 4G LTE Android device
I am so glad to hear that good news!