Junk Fees

Written By
Paul Tracy
Updated November 4, 2020

What are Junk Fees?

Junk fees appear in mortgage closing documents and usually benefit the loan originator or the lender.

How Do Junk Fees Work?

Let's say John and Jane Doe buy a house and receive the Truth in Lending Act statement at closing. Although they already agreed to pay a one-point origination fee and received a Good Faith Estimate of closing costs, the closing statements on the actual closing day include junk fees such as $100 for a messenger fee, $200 for a filing fee, and $150 for "administrative fees."

Why Do Junk Fees Matter?

Junk fees are typically relatively small and not disclosed until the borrower is at the closing table, at which point they are more likely to accept the charges. These fees often just pad the lender or loan originator's bottom line, and it pays to shop around, as well as question the fees.

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