Rules Governing FHA Loan Fees
Instead, FHA rules say lenders and borrowers must negotiate the rates. What the FHA does do is to control the fees and charges associated with an FHA loan.
For example, FHA rules allow the lender to collect an origination fee. For loans through the end of 2009, the origination fee was limited to one percent. The one percent fee cap was eliminated for loans originated after that time, but the FHA does not allow the lender to charge a tax service fee. The FHA rules are designed to give clear guidance to lenders and borrowers alike as to what can be charged and what can't. Transparency in the fee structure is very important.
When it comes to closing costs, the FHA has rules to prevent lenders from charging disproportionate amounts based on the loan. The FHA official site says, "Aggregate closing costs charged to a borrower may not violate the FHA tiered pricing rules which prohibit a lender from charging higher prices for low balance loans than the lender charges for higher balance loans."
There are also caps placed on fees to prevent "variation". This prevents a lender from artificially inflating fees or charging for services not actually rendered.
"A lender's mortgage charge rate (discount points, origination and other fees) may not provide for a variation of more than two percent on its FHA mortgages within a geographic area; and any such variation must be based on actual variations in fees or costs to the lender to make the loan."
FHA borrowers must pay fees based on actual expenses---they cannot be charged without reason or for services that aren't delivered. Borrowers also must not be charged for expenses the bank must pay as the cost of doing business on an FHA loan.
While these rules govern fees, there is no standard fee list--FHA loan terms, rates and expenses may vary from bank to bank-the FHA encourages borrowers to shop around for a lender to get the best possible terms and conditions for the loan. Caps and limits on FHA loan fees do not equal "standard amounts". What you pay in fees with one lender may differ at another, and what you paid on a previous mortgage loan may also be different than what you can expect on a new FHA loan.
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