This is often the commission to the lender.  It's how they make their money. 

Fees are typically based upon "points", which means a percentage of the loan amount.  I've seen them run from 1% to 6%.   Shop around.  

It's a wise idea to have a good mortgage lender among your list of trusted advisers.  For you and for your prospective clients.  

Profits.

Money Money Money to pay the lender and I imagine profits for the company the lender works with. 

Loan origination fees are fees charged by a lender to cover the lender's costs and increase the lender's margin of income at the beginning of the loan aside from interest charges.

They are part of lender closing costs that are paid when buying a house or refinancing a mortgage.

Some are "junk fees" and some are used to bump the yield on the return of the loan.  Some are the costs that occur in obtaining the loan.

Most basically, for bank profits. Supposedly it's to bring down your interest rate, but if you do the numbers, the overall cost when using points is higher at the end of the day.

Loan origination fees cover the cost of processing the loan and overall loan yield to the investor along with the note rate.

A fee to originate a loan.

It's how the lenders make money. Always good to know if there are origination fees with a particular lender.

It's a way for the lender to make money.

Everybody needs to get paid.

Two shades to the answer.

Most lenders advertise interest rates with an origination fee of 1% or one times the loan amount not sales price.

Additional points can be paid in increments of sixteenths which paying more points or additional origination fees the rate goes down in steps.

Lenders are not paid by "origination fees."

Lenders can be paid in a broker fee which is often split in some fashion with the house or company they work under.

Lenders set their commission either annually or quarterly and are paid the same percentage on all closed loan amounts during the time period they set with their "house" as I call it or bank or mortgage company/corporation. Lenders cannot flex commission on loans sold to GSE or our government BUT they can flex on broker points.

Lenders to make money

Essentially they gurantee a living for the loan officer

You have to wonder don't ya? You've got great answers below but ..... if you add up all the other junk fees on the settlement sheet, you'll find there are more 'add on's' than just the origination fee.

$125 fee to copy the loan papers from a PDF. That's a great one too.