Is Your Document Preparation Fee Too High?
Document preparation fees are one of the most frequently flagged junk fees by the CFPB. If your Closing Disclosure shows a doc prep fee — especially from the lender — you should challenge it.
Why doc prep fees are usually junk fees
Preparing loan documents is a core part of origination. A lender charging both an origination fee and a document preparation fee is billing twice for the same work. It's like paying for a car and then being charged extra for the steering wheel.
When charged by a title company or closing attorney, a doc prep fee of $75 to $150 for preparing closing documents (as opposed to loan documents) is more defensible — but still should be modest.
How to challenge it
For lender-charged doc prep fees: 'My Closing Disclosure shows a $X document preparation fee in addition to the origination charge. Could you explain what documents are being prepared that aren't covered by origination? I'd like this fee removed or a detailed justification.'
For title company-charged doc prep fees: verify the amount is reasonable ($75 to $150) and that it isn't also included in the settlement/closing fee.
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Frequently asked questions
What is a normal document preparation fee?
If charged by a closing attorney or title company for preparing closing documents, $75 to $150 is reasonable. If charged by the lender, any amount is questionable because document preparation should be included in origination.
Can I get the document prep fee removed?
Yes. Lender-charged doc prep fees are among the easiest junk fees to remove. Ask in writing for removal, citing that document preparation is included in the origination charge.