A fee that some lenders charge to accept a loan application. Each brokerage is different in the fact that their application fees may or may not cover other costs such as a property appraisal, credit report, or rate lock charges.

The application fee is not always refundable if the loan does not end up closing. Not every state allows for Application fee's on owner occupied loans, California being one of them. 

Bankapedia's Take

Be wary of lender looking to charge up front fee's- it can indicate a few things. 1) a lack of confidence in their ability to close the loan 2) financial distress on the part of the loan officer- he/she simply can't wait for the loan to close to get paid. 3) they have no intention of working on your loan and make all of their money on things like "application fee's".

All that being said, Mr. Bankapedia, having worked as a broker himself, knows all too well how often customers will waste your time and energy, simply to decide not to buy or refi, and end up going to another loan officer. The current Real Estate Environment has increased the number of brokers charging up front fee's for a few reasons. 1) A Loan Agents close percentage is much lower given how much tighter the credit markets are and up front fee's are a way to subsidize their income without actually closing loans.  2) Fraud- companies set up simply to collect up front fee's

While many states have rules regarding up front fee's on residential loans and in some states it is downright illegal, when it comes to commercial loans or hard money loans its fair game. Google up front fee's and commercial and see how many hucksters are out their just to charge a dude diligence fee, only to tell you your loan can not be done. If you have a real and legitimate borrowing scenario you shouldn't have a hard time finding a lender that wont change you up front.