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.
Take a look at this list one of my book readers sent me today. She is buying a home in Southern California. The title and escrow company was chosen by the real estate agent, even though federal law says it is Buyer’s choice.
See if you can pick out the unnecessary fees:
Lenders Policy for $844,000 — $1,074
E Recording Service Fee — $15
Sub Escrow Fee — $100
Messenger/Overnight — $30
Endorsements — $150
Escrow Fee — $2,302
Loan Tie-In Fee — $250
Email Document Fee — $100
Archive Fee — $50
Document Handling — $50
Notary/Sign up Fee — $200
Wow!!! What a lot of fees, right?
This is like going to a restaurant and ordering a hamburger. Then you get charged extra for mayo, ketchup, lettuce, pickle, salt, and the bun. I mean, come on! Isn’t your $15 hamburger enough without collecting more for every tiny thing that is standard and should be included?
Response to the Objection
When the home buyer objected to the real estate agent (the one who chose this over-priced title and escrow company), here is what the agent said:
“The escrow officer is an amazing person. I would trust her with my kid.”
That’s fine if you’re looking for a babysitter! But what’s that got to do with all her needless fees?
The only thing I’d find amazing about her is how she can get away with over-charging home buyers and convince real estate agents to send her business! Makes one wonder… as in illegal kickbacks…? Just musing, not accusing.
Folks, it doesn’t matter if the seller’s agent has already opened title with a certain company. FEDERAL LAW says you, the Buyer, get to choose the title and escrow company.
It’s easy to do a Google search for “title insurance” + zip code. Then make three phone calls and get a quick quote right over the phone. No need to ask for anything in writing. If you shop with three, you should find a good, fair title company to work with.
Don’t bother asking Yelp or other review sites. People who post there are like the real estate agent who chose this high-priced title company because the person is “amazing” or “friendly” or “good with kids.”
As always, thank you for stopping by my blog. If you have a topic you’d like me to write about, send your request here.