Origination Fee Law and Legal Definition

Origination fee is the charge for originating or creating a loan. It is a lender’s charge to a borrower especially for a mortgage loan to cover the costs of issuing the loan which includes preparing loan documents, making credit checks, inspecting and appraisal of a property. Normally it is computed as a percentage of the face value of the loan which is calculated in the form of points and paid at closing. The fees must be listed on the correct lines on the good faith estimate and the final settlement statement in order to be in compliance with the Real Estate Settlement Procedures Act (RESPA)

The term loan origination fee does not necessarily denote a single fee and instead means fees associated with the cost of originating the loan [Hafford v. Equity One, Inc., 2008 U.S. Dist. LEXIS 31964 (D. Md. Mar. 31, 2008)].