Junk fees

Junk fees,

Definition of Junk fees:

  1. Junk fees are a subset of the costs that appear on every HUD-1 settlement statement. Traditionally, that statement was a stand-alone form that federal law required a lender to provide a borrower at closing. It contained a detailed itemization of all costs associated with the loan. Prior to closing, at the point when the parties agree to the terms of the loan and begin preparations for closing, the lender was required to provide a good faith estimate (GFE) of those costs. In 2015, the Consumer Financial Protection Bureau (CFPB) consolidated these documents into one form, the closing disclosure.

  2. Junk fees are a series of charges that a lender imposes at the closing of a mortgage. These charges are often unexpected by the borrower and not clearly explained by the lender. This surprise factor can lead to the impression that these fees are excessive and tacked on to other legitimate closing costs without good reason.

  3. An unfavorable term used to describe lender fees, given in dollars as opposed to a percentage of the loan total.

Meaning of Junk fees & Junk fees Definition