Q. DEAR BOB: A recent reader's letter, which listed a buyer's mortgage broker's fees, was misleading. As mortgage brokers, we must disclose fees that are charged by the actual lender. The only fees mortgage brokers normally charge are a processing fee of $395 to $495 and whatever loan fee points are negotiated with the borrower. (By the way, not all the points go to the mortgage broker.)

Appraisals are priced by the appraiser. The title, escrow, courier, notary and recording fees are set by the title or escrow company. A fee of $55 for a "trimerged credit report" from all three credit bureaus is normal. But I do agree the fees should be lumped into a "lender fee" and a "garbage fee." Application, warehouse and certification charges are junk fees that are not charged by reputable mortgage brokers.

I work hard not to gouge my borrowers, and I get paid for a great service. We must disclose all fees we and others charge. The rebate paid by the lender to mortgage brokers on a "no point" loan is not a kickback, as you implied.--Marcia C.

A. DEAR MARCIA: Thank you for sharing your views. However, you overlooked the high $450 underwriting review fee, $175 document preparation fee and $195 closing review/courier "garbage fees" the reader was being charged.

Rather than rely on one mortgage broker, borrowers should shop around among a half-dozen lenders to compare loan costs. For example, just a few days ago, a friend whose two sons are buying a house from me said his mortgage broker couldn't match the 95 percent financing mortgage terms with no PMI that he found by telephoning lenders in our area. However, I hasten to add that mortgage brokers often perform home finance miracles by matching borrowers with out-of-town lenders offering great loan terms.

DEAR BOB: In two months I expect to make the final payment on my home mortgage. I recall you advised another reader to attach a note indicating this is the "final payment." What documentation should I expect the lender to provide me concerning release, recording, surrender of the deed and escrow balance? My lender has been paying my property taxes and insurance. How is this changeover consummated? Do I need a real estate lawyer?--Norman G.

DEAR NORMAN: Congratulations on making your final mortgage payment. If you have a deed of trust, the lender should provide you with a Deed of Reconveyance. If you have a mortgage, the lender should provide a Satisfaction of Mortgage. Some lenders record these documents; others send them to their borrowers to record.

Borrowers who pay off a contract for deed, land contract, agreement for sale or similar arrangement in which the seller held the title should expect to receive the deed to the property. If you have any difficulty with the lender, hiring a real estate lawyer is advisable, especially if the lender is a private party.

DEAR BOB: We gave our daughter $20,000 to buy a house, but we ended up buying it in our names as she was unable to qualify for a mortgage because of bad credit. The financing and sale details were handled by our daughter's friend, who is a mortgage broker.

Not until we went to the closing did we realize that the interest rate was high and the private mortgage insurance fee was horrendous. I later learned the normal PMI rate is 0.0052 percent of the loan amount.

Our loan was $158,400, which should have a $823.68 annual PMI fee ($68.64 monthly). Instead, we were charged 0.009 percent or $118.80 monthly, almost double the normal PMI. When I questioned this at the closing, no one knew why the fee was so high, but I was told "adjustments would be made." I have written to both the lender and the company that recently bought our mortgage to request a PMI reduction but have received no reply. Do we have any recourse?--Merle D.

DEAR MERLE: After you signed the mortgage papers, including that extremely high PMI fee, it became difficult to make any changes. Legally, you probably have no recourse other than to refinance to get rid of that high PMI fee. But before doing that, put high pressure on the new lender who bought your mortgage. Write to that lender's president. Be polite, but firm. Ask for the name of the actual PMI company, and then contact it. It will take work, but the PMI savings will be worthwhile.

DEAR BOB: I plan to retire in three years and am interested in the Fannie Mae Homekeeper reverse mortgage that you mentioned. When I sell my current house, I will have about $50,000 in equity to buy a smaller house or condominium where I plan to live out my retirement. How does the interest get paid on this type of reverse mortgage? Is it added up and paid when the loan comes due?--Jackie N.

DEAR JACKIE: Most reverse mortgages pay homeowners, who are at least age 62, monthly income for as long as they remain in their homes. Additional reverse mortgage choices include lump sums, which, for example, can be used to pay for a new roof or to buy a new car, and credit lines, which can be used as needed. FHA and Fannie Mae are the major reverse mortgage lenders.

But Fannie Mae also offers "Homekeeper" reverse mortgages for senior citizens who want to purchase retirement homes with no monthly payments. Your situation is ideal since you'll have $50,000 for the down payment. The Homekeeper reverse mortgage can be used to pay the balance of the purchase price.

You will then have no monthly payments. Interest is added to the principal balance. When you eventually move out of your retirement home, sell it or die, the reverse mortgage "matures." The balance, including the interest, is paid off from the home's sale proceeds.

DEAR BOB: In 1987, I financed the sale of my house by carrying back a mortgage for the buyer. It had a balloon payment with the balance due in three years. The homeowner has continued monthly payments, and, earlier this year, I agreed to reduce the interest rate. Should the terms of the mortgage be changed? Should a new mortgage be recorded? Should new title insurance be obtained?--Leonard M.

DEAR LEONARD: Consult a real estate lawyer to modify the mortgage terms. Depending on the details, you may not need new title insurance for your mortgage modification.

DEAR BOB: My mother and I owned three houses together. We bought our first for $13,000 in 1960 and sold it for $18,000 in 1965. We rolled over our profit into our second home, which we bought for $18,500 in 1965 and sold in 1970 for $22,000. Then we rolled over our profit again into our third home, which we bought for $28,500 in 1970, where I still live.

My mother died a year ago. The house was valued at $170,000 then. It is worth about $185,000 today. If I sell now, or wait to sell in about a year, as surviving co-owner, do I get that $250,000 tax exemption on the deferred profits, too?--Beatrice G.

DEAR BEATRICE: Yes, the $250,000 exemption applies to profits deferred from sales of previous principal residences. Your letter is especially interesting because it shows what a profitable investment home ownership has been for you and your late mother. When you inherited your mother's share of the house, you received a new stepped-up basis for that half to $85,000 market value as of the date of her death.

Internal Revenue Code 121 requires you to own and occupy your principal residence an "aggregate" of two of the past five years before sale to qualify for the $250,000 sale tax exemption. However, it is unclear if you must have owned the entire residence for the two years. In any event, your sale profit is well below the $250,000 exemption. Ask a tax adviser for further details.

DEAR BOB: Several years ago, I bought a rental condominium in Hawaii for $140,000. The mortgage is now paid down to about $100,000, but the market value is only $25,000 to $30,000. Even at that price, no buyers are available due to the high maintenance fee and monthly rental negative cash flow.

Moving into the condo is not an option. Friends have suggested a "short sale" at market value for less than my mortgage balance. Is this a feasible option? If I should ever be able to sell it, will the tax loss be based on the difference between my sale price and $140,000 or $100,000?--Dionisios D.

DEAR DIONISIOS: There is no pleasant answer to your problem, which many other homeowners share when their property is worth less than their mortgage balance. Your situation shows why long-distance real estate investments are not recommended.

If you stop making mortgage payments, the lender will foreclose and the loss will ruin your good credit. It won't hurt to ask the lender about approving a "short sale" for less than the mortgage balance without a deficiency payment from you. But don't get your hopes too high.

However, a sale will result in taxable income to you for the difference between the mortgage balance and the amount received at sale for the property. Since the condo is a rental, however, you will have an ordinary loss deduction.

Before you do anything, consult a personal tax adviser to discuss the tax consequences.

DEAR BOB: When my husband died six years ago, I was advised it wasn't necessary to remove his name from the mortgage, and I haven't done so. There are about three years left on the mortgage payments. Should I remove his name before the final payment? What is the procedure?--Rita DiG.

DEAR RITA: I see no advantage to removing your husband's name from the mortgage now. Presumably, you have removed his name from the title to your house, so the title is now in your name alone. Consult a lawyer for details.

DEAR BOB: My wife wants a "dream house," as do I. But a co-worker told me we should get into a small house first and live in it for a few years to build some equity. Then we can look for our dream house later. What do you think?--Abel G.

DEAR ABEL: Your co-worker gave you excellent advice. Don't expect your first house to be your "dream home." Sstart building equity from paying down the mortgage and from market value appreciation if you buy a sound, well-located house.

Most people own several houses before eventually settling down in their dream home, where they remain for many years. Don't expect your first house to be perfect. No house is. But it will get you started.

Home mortgage financing has never been easier than it is today. For example, Fannie Mae's "Flex 97" mortgage provides 97 percent financing, and you can even borrow the remaining 3 percent, too. But you'll need good income and good credit. Before you shop for a house, shop for a mortgage so you'll know what price range you can afford.

Readers with questions should write Robert J. Bruss at P.O. Box 280038, San Francisco, Calif. 94128.