It's called a Pad, $500 is standard in CA It's not for mistakes, it's for last minute fees that could otherwise delay your close. Totally legit. It's refunded (unused portion) at close. 

I hve never seen this and find it a terrible justification for a lender not having their numbers straight.

Not seen a PAD fee yet!

I think that is a lazy way out..you should be closer to the exact numbers.

We close in attorneys office, they have to disclose ALL fees charged and provide a settlement statement 24 hours prior to closing so both buyer and seller can review and ask any questions they may have regarding the information on the statement.

Based on the answers, it seems as though it's another location based thing!

John,

I agree with Nina Hollander .  In this day an age of automation, it doesn't seem possible that calculations could be wrong.  A

I haven't seen our title companies do this. 

What, that is so wrong.

I thought the whole idea of a closing statement was accuracy? 

1st thought is - if they charge the $400 will the buyer get money back then ?? or

padding that much just doesn't seem right.

I've not seen this.  I'd advise the same.  I'm still amazed at how many bullsh__ fees traditional brokerages charge their clients.  Transaction coordinator fees, document storage fees, electronic signature fees.  Always pains me to see that.  But it makes me happy too, because that's one more thing that sets me apart from the competition.  No extra fees!

I usually toss an extra $100-200 in Misc.

The problem is Lender fees are across the board ! You can't possibly know or memorize what each ones costs until you view what they've given the buyer.

that IS alot to have off the mark!!!  I'd want that fine-tuned....

IMO there is no way they can calculate accurate fees until the end - so not sure what you're asking - seems ok to me to fudge just in case - all lenders do it

The "pad" is rather common in my market.  

best to have a knowledge agent during this time

I would advise him to discuss with the escrow company

I agree.

I always pad and hope I am too high.

We don't use escrow companies in my jurisdiction.

John Meussner - I thought it was illegal to do that!

I believe, all local companies require some kind of reserve ($300-500), all or unused portion is returned to a client after closing day. It is just an estimate of costs and fees and if you get an extension, escrow has to recalculate few items. 

They do that here as well, John Meussner - oftentimes you'll see a credit on the final CD for any of those 'extra' fees that weren't utilized.

Like Thomas J. Nelson, Realtor, CRS  said we usually see a PAD in the final estimate of fees from escrow, typically round $300 - $400, and any overage is refunded after closing. I have often been asked by buyers - why do they do this? My response has been to ask escrow.

The only thing I've seen like that is in vacation rental sales. The exact amount paid by seller to buyer is determined by the exact closing date and any changes that may occur in projected rental receipts. 

Thanks for sharing your experience. 

I am sure that most just sign, accept and let things like this pass.

Always better to be a little high rather than short at funding. I see title/escrow pads on every deal I'm involved in. I doubt there are any escrow companies that hit it perfectly--ever. Usually they add a hundred or so to the notary and maybe $50 or so to the recording fees to be absolutely certain there's no shortage when they go to balance the final numbers. $500 is certainly high, but I wouldn't bat an eyelash over it. Title companies are regulated as insurance companies and are watched very closely by the regulators. Your buyer gets a refund immediately after close.

We don't see a lot of padding.  However, this seems to be a result of TRID laws and having to disclose 3 days prior to funding and recording, not wanting the liability of having to re-disclose because of a mistake and then having to extend closing.  There is always some sort of "work around" that comes from new laws and regulations.  We saw the same sort of thing with good faith estimate and  what some lenders called "initial fees worksheets" after the last HUD-1 overhaul. -Kasey

At coe, if we owe or have something coming, we deal with it ...at the end

I agree with Thomas J. Nelson, Realtor, CRS 

This must be a case of one difference between Northern CA and Southern CA. As you know, my escrow officer does not PAD fees like that. Some fees are estimated high (courier, notary, etc.) but not to the tune of $400. 

 Pad fee.   Title companies are trying to shield themselves from oppression and punitive actions by the CFPB.

Sounds like the escrow company doesn't want to pay any penalties. You are correct.

John Meussner I wouldn't think it is a big problem if the unused money was refunded at closing.

This is a new one for me.

They do not add "pad fees" here in NH. The loan offices by law must provide a good faith estimate and be correct withon a certain percent. Ifthey are too low or too high they ca be fined which is federal not state. Maybe a LO could fill in the percentages? The HUD must be complete and correct 3 days before the closing (TRID) for buyer review.