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What is a "Secondary Market Delivery Fee"?

My original Zillow quote didn't include this .5% fee, but the new GFE provided with the other application documents had this added in.  There was also an application fee of $275 added on.  The deal is still pretty good and I think the lender mentioned this over the phone (required by Freddie Mac or something), but this definitely would have changed the lender's rank when sorted by APR.
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May 07 2009 - Indianapolis
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amarter, sound like the 2nd GFE is a preliminary HUD, what you will see at closing. If the fee is not in the column, it is being collected outside of closing and the B represents you, the borrower.
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May 07 2009
Amarter,

I would agree that this lender should have disclosed all fees upfront, However, I will shed some light on this topic...

Fannie and Freddie ARE the secondary market. They are the source of capital to all "conventional" lenders.  Fannie and Freddie obtains capital by selling Mortgage Backed Securities on Wall Street, each trading day. You see...banks and lenders do not have an unlimited source of capital, so periodically when they need a new infusion, they must "deliver" a number of loans to Fannie and Freddie.

While it is true that Fannie and Freddie cannot charge a consumer DIRECTLY for a delivery fee to the secondary market (which is essentially an administrative cost), the lender, bank or mortgage company IS charged this fee.  All fees associated with a loan are typically passed onto the consumer in one fashion or another. These costs to the lender is either bundled into the rate, or it may show up thru other fees on your Good Faith Estimate, most likely included in a "Processing Fee" or "Administrative Fee" or an "Application Fee".

While this could be a human error by your current lender, it also could be an attempt to pull a fast one on you.  My advice would be to get SEVERAL estimates from SEVERAL lenders.  Pay special attention to the APR which can serve as the best way to compare various loan offers. The APR can be found on the Truth In Lending Disclosure.

Best of luck and if I can be of any assistance, please don't hesitate to contact me.
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May 07 2009
Be sure to submit the review.  It is the only thing that may keep these guys honest on the site.
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May 07 2009
Profile picture for amarter
He hasn't given me a reason for the app fee yet, but I will make sure to have that answered next time I talk to him.  This fee is required when I submit my application so it is comparable to other lenders, but the only question is why it was originally not disclosed. 

The new GFE is a different format from the one I got right after submitting my zillow application.  The new GFE has two columns - one for buyers and one for sellers.  Since it's a refi, they are all buyer's costs.  However the application fee isn't in either of those columns, it's directly to the left closer to the fee descriptions and it has a "B" next to it (I don't have it in front of me and I can't remember what "B" stands for).  I wonder if this is related to why it wasn't on the original estimate. I'm digressing a little, but I thank you for your answers and I now have a little bit better idea of what I need to discuss before signing the application.
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May 07 2009
What was his reason for the "new" application fee.
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May 07 2009
Profile picture for amarter
Joe, you are right that it has something to do with my wife being added on.  The lender mentioned that .25% was a result of putting her on the loan.  We decided that was worth it.  The other .25%, he said was charged to everyone.  That is the part that I think should have been included in the Zillow estimate to more accurately compare to other quotes.

Hamp, you're right and I am aware that they're all estimates and not set in stone until I pay my application fee (and even then I understand that some things can change).  However, the application fee shouldn't change based on my credit rating, appraisal, or the market in my opinion so I don't know why that wouldn't have been in the original estimate. 

My question was really concerning that Secondary Market Delivery Fee. I can't quote my lender exactly, but I got the idea that it was something they were "required" to charge and that it was a relatively new development (maybe as a result of recent legislation).  I guess I will need to make sure I get a clearer understanding of that from my lender before I proceed, but it's at least helpful for me to know that it's not a standard fee charged by all lenders.

Since it's a percent of the loan, should it have been included as an origination fee?
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May 07 2009
Is your spouse on the loan?  My guess, and it is just that, is that lender assumed the upper range of the credit scores you outlined in you comments and then when he/she pulled your credit saw that your spouses score was in the 700-719 range.  That would result in a extra .5% fee that was not calculated into the pricing.  Not sure what to make of the added $275 app fee.  The lender should have been up front with you about it as soon as he saw the credit report.  You should at least give this lender a lukewarm review here on ZIllow.  As for the extra $800 in fees,  Fight the application fee and just do the loan in your name if you want to avoid the .5% fee.
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May 07 2009
It sounds like a fee for packaging and delivering the Mortgage to Fannie or Freddie. It also sounds fictional. I would bet the Loan Source missed a pricing adjustment that pertains to your situation. And has now tried to add it, and not call it what it is. Not really ethical.

I also think that one more thing needs to be pointed out. In your last post you say "you have all this info and haven't even filled out an application". The info provided to you so far has been provided as a courtesy. If you have not signed an application, then these disclosures are not really required by the person you are somewhat casually inquiring with. If you complete an app, then the disclosures are required, and required to be accurate. Until then they are, as I have seen it called here, "ballpark estimates". There are technicalities that constitute when an application is taken, and I don't think requesting an anonymous Zillow quote is one of them. Pulling your credit report does, whether you signed anything or not. I may be wrong. Bob Farley will point it out, momentarily, if I am.

Now, if someone has taken a fee from you, they owe you accurate disclosure whether or not you have "signed" or "completed" a formal application. BTW, upfront application fees are illegal in my state. But, they are still charged. IndyMac tried to charge one of my relatives one, and I made them cry over it, and took their loan. They refunded the fee.
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May 07 2009
Profile picture for amarter
Thanks for the advice, but I'm still interested in the definition of that fee. The whole refinance process is tiresome. I've already dumped other lenders for other mistakes or misleading information.  My request id is ZR-QZGVBZY, but the rate and costs are still pretty good compared to other quotes.  It seems that you either get good lenders or good deals, not both.

I understand what you are saying about rewarding bad practices, but it's very inconvenient for the consumer to try to police the smaller transgressions that have a relatively small impact on their bottom line.  It's even worse if the consumer has already paid the application fee.  I have several weeks worth of time invested into this already and haven't even completed an application.  So while I agree with you, I also don't want to waste anymore time (and risk missing a low rate window) for a small reward and a matter of principle.



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May 07 2009
Freddie Mac is a corporation that provides a secondary market for residential mortgages and they cannot charge delivery fees to individual loans.

Furthermore, the application fee should have been disclosed to you when you were comparing quotes. Someone that may have been honest upfront may have lost their chance because they were $200.00 higher in cost at the same rate. At this point who knows what else they will tack on before closing? I would re-review the terms again prior to moving forward with this lender.
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May 07 2009
Dump that lender!

They didn't disclose properly to you and if you choose to work with them you are rewarding that behavior and practice.  Choose a lender that accurately reflected those fees as they should not have surprised anyone..I will bet other lenders will offer the same or better terms to you.

Provide the request ID and you will get plenty of feed back as to which quotes are the best available. 
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May 07 2009
 
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