Originally posted by @Conor Freeman:
@Peter M. is correct. Lender legal costs are always passed along to the borrower. You likely agreed to it in the term sheet. If its a hot button issue for you, make sure the lender you go with is using attorneys from low cost areas (IE Omaha attorneys vs. New York City attorneys).
I guess I want to separate between what is "standard" and what is "making sense".
Maybe what happens is "standard" because it has been practiced widely but I still don't see how this makes sense: As a lender, they're drafting the loan documents according to their best interests, not the borrowers. Also, they're the ones that engage the attorney in the first place and borrowers would have no control in keep a tab. So both in terms of interest and control, borrowers have no benefits in this activity. So passing the cost to borrower doesn't make any sense. Borrowers already pay for their own attorney to review and revise the loan docs. So in a sense, borrowers are paying both ways of legal advice. This means any back and forth between lender and borrowers, the borrowers will have to absorb all the cost which forces the borrowers to just quickly accept the terms to avoid further cost. A not very ethical practice in my opinion.
For appraisal cost, origination, etc... Those make sense to have borrowers pay because the services were rendered to serve the borrower's interest and need in getting the loan. They are also fixed cost, so it is within the borrower's expectation on what needed to pay afterward.
Are there lenders that willing to pay for their own legal cost or is that an unicorn concept?
