6-13: THIRD-PARTY FEES (11/18/1994)

© HUD Single Family Housing Policy Handbook 4235.1

In addition to the following list of fees and charges, the local HUD Office may authorize or reject any other charge, or the amount of any charge, based on what is reasonable and customary in the area.

A. Appraisal Fee and Inspection Fee. The borrower may pay HUD's established maximum fee, or the actual cost of the service, whichever is less.

B. Credit Report. The borrower may pay the actual cost for a merged in-file report, containing the information currently available from three consumer credit information repositories.

C. Deposit Verification Charge. The borrower may pay the actual charge imposed by the depository institution.

D. Document Preparation Fee. The borrower may pay a document preparation fee if this service is performed by a third party who is not controlled by the mortgagee. The mortgagee may not charge a fee if it performs this service itself.

E. Property Survey. The borrower may pay if a survey is required by the lender, although a survey is not required by HUD.

F. Title Examination and Title Insurance Policy. A title insurance policy equal to the maximum claim amount must be submitted in the closing package, and the borrower may pay for these items.

G. Attorney's Fees. The borrower may pay only if the attorney is not an employee of the mortgagee, or is not an attorney who routinely receives referrals from a particular mortgagee AND issues the title insurance. If an attorney who is not an employee of the mortgagee is routinely used on referral from the mortgagee to close loans and issue title insurance, the borrower may only be charged a notary fee.

H. Settlement Fees. The borrower may pay only if the closing agent is not an employee of the mortgagee. A fee may be charged if the settlement agent is an independent company or a subsidiary of the mortgagee that regularly closes loans for several different mortgagees.

I. Mortgage Broker's Fees. The borrower may pay only if the broker is engaged independently by the mortgagor. A broker's fee is prohibited if there is any financial interest between the broker and the mortgagee. The broker agreement must be submitted with the mortgage insurance application.

J. Tax Service Fee. The borrower may NOT pay a tax service fee in order for the mortgage loan servicer to check the tax rolls in each county where loans are recorded.

K. Recording Fees and Taxes. The borrower may pay recording fees on the first and second mortgages that are customary or required in the area, and recording taxes on the first mortgage that are required. The second mortgage is not subject to any State or local recording taxes, or stamp taxes, because the second mortgage is a mortgage to the Federal government.

L. Tests or Treatments. The borrower may pay for tests or treatments required by HUD such as tests of water supplies, soil percolation tests for individual septic systems, or testing for or treating insect infestation.

M. Courier Fees. The borrower may pay a courier fee for delivery of a mortgage payoff to a lien holder and for closing documents to and from the settlement agent. If this arrangement will take place, a written agreement between the borrower and the lender must be executed before loan closing.