Understanding Your Section B Closing Costs at Tomo Mortgage

Quick answer: Section B on your Loan Estimate is a list of required third-party fees (appraisal, credit report, fraud verification, and more) that your lender doesn’t profit from. Some lenders hide these inside their lender fees. Tomo Mortgage charges $0 in lender fees and lists every Section B cost separately, passed through at cost.

What are Section B fees, and why should you care?

Section B fees are “services you cannot shop for,” meaning they are third-party costs that are required to process and close your mortgage. Every lender incurs them. The difference is how lenders handle them. Some lenders bury these costs inside inflated Section A lender fees so you never see what you’re actually paying for. At Tomo Mortgage, we’d rather be upfront about exactly where your money goes.

Here’s how Section B fits into the bigger picture of your closing costs.

Section A: Origination Charges, Lenders Fee

These are the lender’s own fees and discount points. Think origination fees, underwriting fees, processing fees. This is where most lenders make their money. (Quick reminder: Tomo Mortgage charges $0 in lender fees. No origination fee. No processing fee. No underwriting fee. We talk about this a lot because we’re proud of it.)

Section B: Services You Cannot Shop For

Third-party services your lender requires and selects the provider for. You pay the cost, but the lender picks who does the work.

Section C: Services You Can Shop For

Third-party services (like title insurance and settlement) where you’re free to compare providers and choose your own.

What fees are in Section B at Tomo Mortgage?

Every mortgage requires behind-the-scenes work from third party companies to make sure your loan is accurate, legally compliant, and properly funded. Here’s what you’ll see on your Tomo Mortgage Loan Estimate and what each fee actually covers.

Appraisal Fee

Before a lender can finalize your mortgage, an independent appraiser has to confirm that the home you’re buying is actually worth what you’re paying for it. This protects you from overpaying and protects the loan from being backed by a property that doesn’t support the value. The appraiser visits the property, evaluates its condition, compares it to recent sales of similar homes nearby, and delivers a report. You’ll see this fee on virtually every Loan Estimate you receive, regardless of lender.

Credit Report Fee

Your credit history is foundational to your mortgage. Lenders are required to pull your credit from the major bureaus to verify your score, outstanding debts, and payment history. That information determines your eligibility, your rate, and your loan terms. The credit report fee covers the cost of obtaining that report. It’s standard at every mortgage company, though the amount can vary depending on factors like the number of borrowers on the loan and the credit bureaus involved.

Tax Service Fee

This fee covers a third-party service that monitors your property tax payments over the life of your loan. Why does this matter? If property taxes go unpaid, a tax lien can be placed on the home, which puts the mortgage (and your ownership) at risk. The tax service keeps tabs on your tax status so issues can be caught and addressed early. Most major lenders charge this, and it’s one of those behind-the-scenes protections that quietly does its job for years after you close.

MERS Fee

MERS stands for Mortgage Electronic Registration Systems. It’s a national registry that tracks mortgage ownership and servicing rights. Instead of filing paper assignments at the county recorder’s office every time a loan changes hands, MERS keeps a digital record. This fee covers the registration of your loan in that system. It keeps the chain of title clean and reduces paperwork for everyone involved.

Verbal Verification of Employment

Right before your loan closes, your lender is required to confirm that you’re still employed. This is a final check to make sure nothing has changed since you applied. Investors require it. The verification is typically a quick call to your employer, and this fee covers the cost of that third-party service.

Electronic Document Delivery Fee

This fee covers the secure electronic platform used during your closing. It’s the technology that enables digital signing and document management so your closing experience is faster and more streamlined. Instead of printing, shipping, and manually processing stacks of closing paperwork, this platform handles it digitally. It’s a big part of how Tomo is able to close in as few as 12 to 21 days instead of the industry average of 42.

Warehousing Fee

Funding a mortgage isn’t instant. After closing, your loan is held on a short-term credit line while the final processing and settlement steps are completed. That credit line has a carrying cost, and this fee covers it. Most lenders bundle it into their origination fee (and mark it up). We list it separately so you can see exactly what you’re paying for.

Fraud Verification Fee

Before your loan is finalized, we run a third-party identity and fraud check to verify that the information on your application is legitimate. This protects against identity theft and mortgage fraud, both of which are more common than most people realize. Think of it as a security layer that helps make sure nobody is taking out a loan in your name without your knowledge. It also helps us maintain the quality standards that keep our rates low for everyone.

	Traditional Lender	Tomo Mortgage
Origination Charges / Lenders Fee (Section A)	$2,000 to $4,500 (includes discount points + lender profit + possibly bundled third-party costs)	$0
Third-Party Services (Section B)	Often hidden inside the Origination Charges	Listed individually, passed through at cost
Transparency	One bundled number. Hard to tell what you’re paying for.	Every fee itemized with a clear purpose.

Why is Tomo Mortgage adding these fees now?

We’ve always believed you should know exactly what you’re paying for and why. Until now, Tomo Mortgage was absorbing many of these third-party costs. As those costs have grown, we made the decision to pass them through at cost rather than do what most other lenders do: bury them in a vague origination fee or inflate your interest rate to cover them.

We’d rather show you clear line items than hide costs inside one big number. That’s what transparency looks like.

Can Section B fees increase between my Loan Estimate and closing?

In most cases, no. Section B fees are subject to zero tolerance under TRID (TILA-RESPA Integrated Disclosure) rules, which means the amounts on your initial Loan Estimate are generally the maximum you’ll pay at closing. If the actual cost comes in higher, the lender covers the difference.

That said, there are specific situations where fees can increase. Federal rules allow adjustments when there’s been a changed circumstance, such as new information that wasn’t available when your Loan Estimate was issued, a change you request (like switching the loan type), or an extraordinary event outside anyone’s control. If a changed circumstance does apply, your lender is required to issue a revised Loan Estimate within three business days so you can see the updated numbers before closing.

The key takeaway: surprises at the closing table are rare, and when fees do change, there are clear rules governing when and how that can happen.

How do I compare Section B fees across lenders?

When comparing Loan Estimates, don’t just look at the total. Look at where the fees sit. Section A is what the lender charges you directly. Section B is what third-party services cost. A lender with a low Section B but a high Section A might not actually be saving you money. They may just be bundling costs differently.

At Tomo Mortgage, we keep Section A at $0 (except for discount points that you choose) and list third-party costs in Section B exactly as they come to us. The real comparison isn’t which lender has the lowest number in any one section. It’s which lender gives you the clearest picture of what you’re actually paying for.

The bottom line

Closing on a home costs money. There’s no getting around that. But not all closing costs are created equal. Some are fees your lender controls and sets. Others are the actual cost of independent services required to get your loan across the finish line. Knowing which is which is one of the most valuable things you can do when comparing offers.

At Tomo Mortgage, you’re paying $0 in lender fees. What you see in Section B is the cost of doing the job right. Nothing more, nothing less.

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Have questions about a specific fee on your Loan Estimate? Reach out to your Tomo Mortgage Loan Advisor. They can walk you through every line item.