It is the stated policy of both Fannie Mae and Freddie Mac that they will not purchase or securitize any mortgage if the total points and fees charged to the borrower exceed the greater of 5% of the mortgage amount or a maximum of $1,000. In other words, the test is the greater of $1,000 or 5% - the $1,000 only comes into play if the mortgage amount is less than $20,000.

Points and Fees Defined:

Points and fees include:

• origination fees
• underwriting fees
• broker and finder's fees
• charges that the lender imposes as a condition of making the loan - whether they are paid to the lender or a third party.

Exclusions:

Points and fees that do not have to be counted against this limitation include:

• bona fide discount points (no test is specified for determining whether or not discount points are bona fide)
• fees paid for actual services rendered in connection with the origination of the mortgage, such as:
  • The following Regulation Z Section 226.4 (c) (7) charges: attorneys' fees; notary fees; appraisal fees; credit report fees; surveys; title examinations and abstracts; flood certifications; home inspections; title insurance; tax and insurance escrows
  • The following Regulation Z Section 226.4 (d) charges: hazard insurance; flood insurance
  • The following Regulation Z Section 226.4 (e) charges: state and local transfer taxes or fees
  • Mortgage insurance premiums
• other miscellaneous fees and charges that, in total, do not exceed 1/4% of the loan amount.

Calculation of Points and Fees:

	Lender Origination Fees/Discount Points (the total amount of origination fees and discount points paid by the borrower to the lender)
+	Lender Underwriting Fees (underwriting fees paid by borrower to lender)
+	Total Mortgage Broker/Finder's Fees (the total amount of all fees and charges (whether or not prepaid or non-prepaid finance charges) paid by the borrower to a mortgage broker)
+	Other Lender-Imposed Charges (the total amount of all fees and charges paid by the borrower, whether or not prepaid or non-prepaid finance charges and without regard to whom the fee or charge is paid) to the extent not otherwise captured in any of the above categories; for purposes of this calculation, we assume that all fees and charges (excluding lien and other payoffs) paid by the borrower and not otherwise captured in any of the above categories is a fee or charge imposed by the lender)
-	Bona Fide Discount Points (for purposes of this calculation, we assume that all discount points paid by borrower to lender only are bona fide; discount points not paid to lender are deemed not bona fide)
-	Fees Paid for Actual Services Rendered (these fees include generally those fees set forth in Regulation Z Section 226.4(c)(7), (d) and (e) and mortgage insurance charges, and are excludable regardless of to whom the fee is paid, to the extent included in any of the "Total Mortgage Broker/Finder's Fees" or "Other Lender-Imposed Charges" categories above)
-	Other Miscellaneous Fees/Charges Up To .25% of Mortgage Amount (this is a "catch-all" category which permits the deduction of up to .25% of the mortgage amount of any miscellaneous fees and charges only included in any of the "Total Mortgage Broker/Finder's Fees" or "Other Lender-Imposed Charges" categories above)
+/-	Creditor Requested Adjustments (the total amount of all customer requested overrides)

Mortgage Amount means:

	Original Principal Balance/Credit Line Available
+/-	Creditor Requested Adjustments