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Closing Costs and Other Fees


	Information by State Print version Email this to a friend

Chapter 2
Mortgage Credit Guidelines
Page 2-15

All closing costs associated with a HUD-insured loan, including Paid Outside of Closing (POC) items, must be itemized on the HUD-1 for RESPA compliance.

Whenever, "Actual Costs" are permitted, it is expected that they do not exceed what is reasonable and customary for the area!

COST	EXPLANATION	MAXIMUM	CAN FINANCE
APPLICATION FEE (Bond Loans, MAP Loans)	Charged to the borrower but not included in acquisition.	Actual Cost	No
APPRAISAL FEE	HUD Owned Properties Non-HUD owned Properties-Actual customary charge for area	Actual Cost	No Yes
ATTORNEY FEES	Services normally performed by the mortgagee and properly included in the 1% origination fee. Buyers may engage their own attorney for representation purposes, but costs may not be financed or otherwise considered as "closing costs" for loan calculation or minimum cash investment purposes. Services performed by attorneys in connection with the loan closing, such as review of abstract or preparation of closing documents are allowable	Not Allowed	No
COST	EXPLANATION	MAXIMUM	CAN FINANCE
BROKER ADMINISTRATION/PROCESSING/ TRANSACTION FEE, ETC.	Fees charged by a real estate broker for complying with Governmental regulations.	Not allowed
BUYER-BROKER FEES (Real Estate)	Real Estate Broker must be exclusive agent of the mortgagor. Prohibited, if there is any financial interest between the broker and the mortgagee (Please see: HUD handbook 4000.2: 5-3L)	Actual Cost	Yes
CLOSING FEE (Loan) + (Real Estate)	When the real estate or loan transaction is closed by a third party, the actual, reasonable, and customary cost may be charged. The third party to whom the charge is made must be identified on the HUD-1. When the loan is closed by the lender, the 1% origination fee is considered to cover this cost	3^rd Party Actual	Yes
COMMISSION (Real Estate)	Not Allowed		No
COMMITMENT (Non-Profit)	Any commitment fee, application fee, or processing fee charged by a non-profit agency or the instrumentality of government is allowed to be charged to the borrower.	Actual Cost	Yes
COURIER FEES	This fee may be charged only on refinances and only for delivery of the mortgage payoff to the lien holder and for closing documents to the settlement agent. The borrower must agree in writing to pay for the courier service, the request must be made before loan closing. (Please see: HUD handbook 4000.2: 5-30-0)	Actual Cost	Refi Only
COST	EXPLANATION	MAXIMUM	CAN FINANCE
CREDIT REPORT	Residential Mortgage. The actual cost should be the customary charge for the area (for a joint or per each individual applicant report). Costs exceeding $75 must be explained and justified. Fees collected in advance are permissible but excess must be refunded at closing. A "three repository merged" credit report (TRMCR) may be used. If the lender subsequently orders a full Residential Mortgage Credit Report (RMCR), the borrower may only be charged for the RMCR. See ML 95-7 for further details. If an automated underwriting system is used the greater of the credit report charge or the actual automated system processing fee (which includes credit information) is allowed.		Yes
DOCUMENTATION PREPARTATION	If performed by a third party the mortgagee may not charge this fee if they perform this service themselves. This is included in the 1% origination fee (Please see: HUD handbook 4000.2: 5-3-6)	Customary Charge	Yes
COST	EXPLANATION	MAXIMUM	CAN FINANCE
DOCUMENT STAMP ON DEED	May be charged to either buyer or seller except where the law requires one or the other to pay the tax and prohibits a shifting of the expenses. If the buyer pays, this item may be included	Actual Cost	Yes
ENDORSEMENT/ALTA	See Title Insurance.
ENERGY RATING REPORT FEE	For EEM only. See HUD handbook 4155.1 rev-4 CHG-1 para 20	Max $200.00	Yes
ESCROW DEPOSIT Taxes & Insurance Premium	Two months maximum	2 Months	No
EXPRESS MAIL/SPECIAL DELIVERY	See courier fee
FINDERS FEES & KICKBACK PAYMENTS	0 (zero) (Please see: HUD handbook 4000.2: 5-5-A2-4)	Not Allowed	No
FLOOD PLAN Determination Insurance	1) Reasonable and customary fee for the initial determination of flood zone. 2) Any escrow established for flood insurance at the time of loan closing is considered a prepaid item	Actual Cost	Yes
FLOOD CERTIFICATION	A fee for determining the continuing determination flood zone status for the life of the mortgage may be charged to the buyer.	Actual Cost	Yes
HAZARD INSURANCE PREMIUM	The actual cost for the first year only plus no more than 2-months escrow, subject to aggregate adjustment requirements. Hazard insurance may be paid by the borrower or financed in the mortgage on refinances but not part of 3% minimum cash investment.	Actual Cost + 2-months	No
COST	EXPLANATION	MAXIMUM	CAN FINANCE
HOA	Homeowners and Condominium Association Assessments. The actual cost of no more than 2-months can be collected when those assessments are for an escrow account. HOA transfer fees may be charged but are not considered closing costs for loan calculation or minimum cash investment purposes.	2-Months	No
HOME INSPECTION SERVICE FEE	The lower of $300 or the actual cost may be included as closing costs in calculation of the mortgage amount	Lower of $300 or Actual	Yes
INSPECTION FEE	See attached fee schedule		Yes
INTEREST CREDIT (Refinance)	On refinances, the lender and borrower may agree to per diem interest credit of up to 30 calendar days. A per diem interest credit may not result in cash back to the borrower.	Actual Cost	All Refinances w/Appraisal
INTEREST	Calculated on 365 days per year basis. Interest may only be collected from the mortgagor from the date the mortgage proceeds are actually disbursed by the mortgagee. May not be calculated on 360 days basis. Interest may be paid by the borrower or financed in the mortgage on refinances but not part of 3% minimum cash investment.	Actual Cost	NO
LOCK-IN FEE (Committment Fee)	Any lock-in or commitment agreement for which a fee is charged must be in writing and must guarantee the rate and/or discount points for a period of not less than 15 days before the anticipated closing date. Lock-in fees may be paid by the borrower, but not financed in the mortgage or part of 3% minimum cash investment.	Actual cost	NO
MANUFACTURED HOME	Engineer certification of foundation.	Lessor of Actual Cost or $250	Yes
MORTGAGE CREDIT CERTIFICATE (MCC)	May be charged to customer but not financed.	Actual Cost	No
MORTGAGE REGISTRATION TAX	AKA, Intangible Tax on Mortgage	Actual	Yes
COST	EXPLANATION	MAXIMUM	CAN FINANCE
NOTARY FEE	Services normally performed by a third party.	Actual Cost	Yes
ORIGINATION FEE	Up to 1% of the principal amount of the mortgage, excluding any Up-Front Mortgage Insurance Premium. (Please see: HUD handbook 4000.2: 5-3D)	1%	Yes
ORIGINATION FEE-SUPLEMENTAL (For 203(k) Loans Only)	When 203(k) mortgage involves the insurance of advances and partial disbursements of the rehab escrow account, a supplemental origination fee based on the cost of rehab is permitted. Refer to the 203(k) Maximum Mortgage Worksheet, line B11. (Please see: HUD handbook 4000.2: 5-3D)	1 ½%	Yes
PEST INSPECTION		Actual Cost	Yes
PHOTOS		Not Allowed	No
PREPAYMENT PENALTIES	On refinances WITH appraisals only the "existing 1^st lien" may include prepayment penalties on conventional & Title 1 loans. (Please see: HUD Mortgagee Letter 96-18)	Actual Cost	yes
PROCESSING FEE	When charged by the lender or real estate broker it is considered to be included as a part of their origination and/or commission.	Not Allowed	No
PROPERTY TAXES AND ASSESSMENTS	Buyer/Seller charges for current year taxes. An escrow deposit of no more than 2-months can be collected from the borrower. Property taxes may be paid by the borrower or financed in the mortgage on refinances but not part of 3% minimum cash investment.	Actual cost + 2 months	No
COST	EXPLANATION	MAXIMUM	CAN FINANCE
RECORDING FEES	1) Deed of Trust (per page), 2) Warranty Deed, 3) Deed of Trust Riders, 4) Housing Authority Addendum, 5) Release of Deed of Trust, 6) Power of Attorney	Actual Cost	Yes
RECORDING FEE-ASSIGNMENT	Not Allowed on the assignment of the mortgage to the investor	Not Allowed	No
REPAIR ESCROW FEE	Fee to set up and administer escrow-only allowable when required repairs are not and can not be completed prior to closing, because of weather or other unusual circumstances	Reasonable and Customary	No
SALES TAX (Title & Escrow)	May be charged to the borrower if required by state law.	Actual cost	NO
SERVICING FEE	Not allowed (See HUD Handbook 4330.1, Rev-5, paragraph 4-12A)	Not Allowed	No
STATE DOC TAX		Actual Cost	Yes
SURVEY	These fees can be financed in determining maximum mortgage amount	Actual Cost	Yes
TAX CERTIFICATE	Sellers charge or may be charged to mortgagor on a refinance.	Actual Cost Refinance Only	Refi Only
TAX SERVICE FEE (Real Estate)	Not Allowed (See HUD Handbook 4330.1, Rev-5, paragraph 4-12B)	Not Allowed	No
TITLE INSURANCE Abstract or Title Evidence, Title Search Lender’s Policy	Owners and Lenders Policies Examination Fee Endorsements	Actual Cost	yes
TRANSFER TAX		Actual Cost	Yes
UNDERWRITER FEE	Not Allowed	Not Allowed	No
COST	EXPLANATION	MAXIMUM	CAN FINANCE
VERIFICATIONS (VOE & VOD)	The mortgagee may not charge this fee unless the cost is actually incurred. Payment verification is required. If verifications are completed via employer’s or financial institutions’ 900 number, the average cost per call for such verifications may be charged. Lenders should re-verify their average costs on a semi-annual basis by reviewing previous bills.	Actual Cost Max $30	Yes
WELLS & SEPTIC	See Inspection Fees Table	Actual Cost	Yes
WIRE FEE	This fee may be charged only on refinances and only for paying off existing lien(s) electronically.	Actual Cost	Yes

APPRAISALS PROPOSED and EXISTING (1-4 Units)

Single Family Residence: Appraiser may charge a fee that is reasonable and customary	Cost
Each Additional Unit: Appraiser may charge a fee that is reasonable and customary	Cost
CWOT -- Claims Without Conveyance of Title (Exterior Only)	$200

PROPOSED MASTER APPRAISALS (MA) CONDITIONAL COMMITMENT (MCC)

Each Basic Plan Type: Appraiser may charge a fee that is reasonable and customary	Cost
Each Lot	$10
Each variation or optional time in excess of 25 for the general all play type, and in excess of 10 per individual plan	$2

INSPECTION FEES

Existing Property Repairs

$50-$60

Single Family Houses: New Construction

$50-$60

Condominiums & Townhouses: New Construction First Unit

Each Additional Unit (Same Building)

$50-$60

$10

Please note that some localities allow different inpection fees.

Note: Any of the forms cited above can be obtained at the HUDclips forms webpage.

Content updated July 18, 2003


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