From: lainhart@odel.stg.TRW.COM (Mike Lainhart)
Subject: WYPFIWYG
Followup-To: lainhart@odel.stg.trw.com
Summary: What You Pay For Is What You Get?  What did I pay for?
Organization:   TRW, One Space Park  MS O1/1061, Redondo Beach,CA 90278  (310) 813-0690
Date: Fri, 9 Oct 1992 16:45:20 GMT


A few days ago I posted a question about a free re-refinance that I had been
offered.  I have received some very informative response: the main points
being that I have little to lose by pursueing this and if it doesn't look
good in the final signoff, don't sign.  I am no longer worried that these
people will be destitute by giving me a free re-refinance or that they are
generous to a fault.  They make money "selling" my loan!?  I know that
mortgages are sold, I just never wondered about who sold them or what the
profit may be.  Thanks to all of you that provided me with some insight.
(See below for a request for more.)

One of you asked for some detail about the fees charged in a refinance:
These were the fees that I paid for my last refinance as reported by the
escrow company.

DISBURSEMENTS
 (1)  LOAN CHARGES: Loan origination fee (1 point)	$1,750.00
 (2)  Tax Service Contract 				    63.50
 (3)  Processing Fee 					   200.00
 (4)  Flood Check Fee 					    25.00
 (5)  Re-Inspection Fee 				    85.00
 (6)  Warehouse Fee 				   	    50.00
 (7)  Broker's Fee 					   400.00
 (8)  Odd Day Interest (New Loan) 			   151.04
 (9)  Hazard Insurance Premium      			   462.00
(10)  Messenger Fee 					    45.00

COMMISSIONS/COSTS AND EXPENSES
(11)  TITLE CHARGES: Title Insurance Policy 		  $868.00
(12)  Title Company Disbursement Fee 			   110.00
(13)  Recording Fees: Deed 5.00 Mtg $26.00 Rel $10.00       41.00
(14)  ESCROW CHARGES: 					   450.00

DEMANDS AND PAYOFFS
(15)  Payoff of old loan --
(16)  Odd Day Interest (Old Loan) 			 1,026.82
(17)  Forwarding Fee 					    15.00
(18)  Demand & Statement Fees 				    45.00
(19)  Reconveyance Fee 					    50.00

In addition I paid $50.00 Loan Application Fee and $275.00 for an
appraisal.  All of this is for a $175,000.00 dollar loan at 7.875%,
fixed rate for 30 years due in 7.  We signed off on the loan on 
May 22,1992.

Now, the same broker has volunteered to re-refinance to a 7.25% loan
30/7 for FREE!  My concern was that all those people who were
scarping out a meager existence on these fees may starve!:-)  I am
still mystified as to exactly what I paid for.  What service did
the broker really provide that was worth $400.00 to me?  Did they
make certain that I got the best loan?  AND, what did they use a
warehouse for?  If refinancing in May cost this much, why can they
re-do it now for free?  Part of the explanation that I have received
over the net is that they will reuse some of the earlier data (like
the appraisal) and that they have gotten a good deal with their
freindly escrow company, etc.  But a large part of their generosity
seems to be that they make money "selling" the loan.  If they are
making enough money to pay part of the original refinance fees in
this re-refinance, why couldn't I have gotten by cheaper in the
first refinance?

Is there a FAQ for this group that explains the fees charged to
borrowers and exactly what services are provided by brokers and
lenders in return for those fees AND that explains the financial
mechanics of "loaning" money and "selling" the loan.