Loan Fees Shouldn't Be a Mystery
To you, it's a "buffer". To a client, it's a "miscellaneous" mystery. To a lot of people, it looks an awful lot like gouging, or at least the potential to gouge. Since the SAFE act of 2008, as lenders we've been legally mandated to know our fees, and disclose our fees, in a precise manner. In some (understandable) areas, we have 10% for wiggle room - things like an 
appraisal can cost more in some circumstances than others, for example. We also have wiggle room for a change in circumstances. If something pops up (appraisal comes in short, borrower files BK and credit tanks, etc) we have no tolerance and fees/costs/rates can change accordingly.
It really comes down to best-efforts. Are you trying your best to let people know what you cost, or are you trying to hide things? Worse yet, are you being too lazy to get it right up front?
It shouldn't come as a surprise to know regulators and lender's compliance departments aren't too fond of mystery when it comes to fees. So when we get a fee sheet from title with something like a $50 "miscellaneous fee", we get concerned. And by concerned, I mean we make you remove it. Think about it - a client is going to review our fee sheet and ask what the heck a 'miscellaneous fee' is? Should I be telling them it's for all of the miscellanous you have to do? As a title/escrow company, there's already a lot of "miscellaneous" going on - between "fax fees", "copy fees", "time spent stamping an envelope fees" - you get the picture.
Or what about the fun times involved with a "buffer fee"? I've seen "buffer fees" upwards of $500, which in an area of 0-10% tolerance is insane. It's also an opportunity for a regulatory nightmare. As a consumer, if you tell me my costs are going to be somewhere between $0 and $500, I'm going to all but assume they'll be closer to $500. I may even be fine with paying the higher end, but you'd better be able to tell my why I'm paying it, or agreeing to pay it. "In case we miss something" is not an acceptable answer. "In case fees pop up that we're not expecting" doesn't pass the smell test, either.
Sure, things will come up along the way. You'll need another endorsement here. You'll need an extra page to record. So disclose higher on the recording fee or add an endorsement charge to your original charges. But if you disclose for a single family home and later are told it's a condo, that's a change of circumstance, and a valid one. Things pop up for us lenders too, and we cure them as they come with lender credits and the haircuts we take to keep both regulators and our clients happy. But as a lender, we don't list $2000 as our lender fees but tell people they'll really be closer to $1000. If we did people would simply go to a competitor. Title and escrow companies don't usually have the problem of being shopped to death by consumers, so as nice as that must be, it shouldn't open the door to taking liberties with consumers.
Disclose the costs. To the best of your ability. If you don't know them, do the work to figure them out. Or, best of all, use your experience to put together a cost worksheet that's going to nearly mirror the final closing disclosure. You know, the way we do.
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