Sit down with a lender and he can show you the breakdown and explain the fees.

Definition from the CFPB:

An origination fee is what the lender charges the borrower for making the mortgage loan. The origination fee may include processing the application, underwriting and funding the loan, and other administrative services.

Rodney,

My suggestion to you is to ask a lender in your neck of the woods.  California and Utah differ on many rules and laws.  Wishing you all the best in 2021!

The short answer is it is part of what the lender makes for doing the loan. 

Let's see what the lender in the AR community has to say about this. 

I wish you all the best with your real estate studies. 

As with all parties in a real estate escrow, Lenders need to generate revenue to stay in business.  Per the post-market crash Federal Regulations (MDIA & TRID), Lenders needed to find a uniform word to describe all of their fees...this word is "Origination".  

You'll find in the Federal Disclosure Forms, there is a Box "A" titled Lender Origination, which is where all fees due to the Lender need to be listed/itemized.  While different Lenders have different words to describe their fees (i.e. Processing, Underwriting, etc.), this Box "A" is where those fees need to be disclosed (in order for the consumer to have an apples-to-apples manner to compare Lenders when shopping).

What many people are unaware of however, is that Lender Origination Fees can be a "NEGATIVE" number (thus providing CREDITS towards other Non-Recurring & Recurring Costs). The differences in Lender Origination Fees are predicated on which Interest Rate the Borrower selects.  In short, the LOWER the Interest Rate, the HIGHER the Lender Origination Fees (i.e. the concept of "paying points"), while the HIGHER the Interest Rate, the LOWER the Lender Origination Fees (i.e. utilizing "rebate pricing' to provide CREDITS).

Below is an article that helps explain these concepts further...hope it helps.  Happy New Year!  Thanks for looping me in Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets 

https://activerain.com/blogsview/3635686/the-truth-behind-mortgage-rates---read---share-freely 

These people in the loan business have to make a living too...is your answer

Jason E. Gordon will set you straight on the fees to originate a loan. The name says it all, but he can give you the details.

The botton line is yield! How a specific lender obtains that yield is an individual decision. Since most loans are packaged and sold in the secondary market, the yield is pivotal! 

There are costs involved in everything that we do. The lenders charge for some of the expenses of processing a loan application and approving a loan and drawing up the paperwork that the buyer will sign.