Drops In Rates Spur Repeat Refinancings Fees Catch Many People By Surprise

Some homeowners who refinance their mortgages are facing higher-than- expected closing costs and burdensome procedural requirements from title insurers, mortgage lenders and settlement attorneys.

Most processing fees cover legitimate services and procedures, but they seldom match advisers' estimates, said homeowners who recently refinanced.

As a result, their financial exposure on title searches, loan escrow charges, legal work and miscellaneous items is hundreds, even thousands, of

dollars higher than they expected on transactions that are supposed to save money.

Local title-company executives, mortgage lenders and settlement lawyers, however, say their fees and methods are appropriate. They attributed any discrepancies between pre-closing estimates and actual expenses at the settlement table to communications problems, busy banks pressed by numerous refinancings and the need for fiscal safeguards.

"I'm surprised to hear about these problems, since we provide a good-faith estimate," said Katherine Varalli, a vice president in the Horsham-based residential mortgage department of PNC Bank. "People should remember that the cost of a refinanced mortgage is the same as the purchase loan."

But even relatively small mortgage refinancings are subject to wide gaps between estimated expenses and final costs, said Joseph Schienholz of Holland, Bucks County.

"My mortgage company gave me an estimate for the refinancing, but it cost $600 more than I expected," said Schienholz, who spent $3,100 in April to refinance a $61,000 mortgage on his second home in Brigantine, N.J.

"The title company quoted $107 (for settlement), but charged me $372," he said. "They called it all 'title insurance,' but this fee included title insurance and all these cockamamie searches," which appeared on an itemized bill he received at the settlement.

The title firm's bill, he said, included the following fees: $90 examination fee; $107 underwriting premium; $10 survey reading fee; $10 handling fee; $30 tax and municipal improvement searches; $20 upper court searches; $25 restriction endorsements; $30 service fee; and $50 mortgage endorsement.

"Even though they itemized it, I still can't figure it out," said Schienholz, a school superintendent in Burlington County.