Simple! Origination fees are for the purpose of making money for the originator.

A loan officer has to make a living...

Origination fees are commission to the lender.  Points are what buys a mortgage down.  They are different in Virginia.

Several things, including buy down the interest rate, and commission to the lender.

There are a number of different fees when a borrower closes a loan. Loan origination fees used to be one percentage point of the start loan amount. Today a borrower can choose to pay up to five percentage points to buy down the interest rate for the life of the loan.  For example a $200000 loan in Salt Lake with perfect FICO can get 3% rate 30 year monthly payment $843 with no origination fee but if they want to pay 1% origination they can pay $2000 to get a rate of 2.75 payment $813. Payment sample is principle and interest only. In my opinion origination or points doesn't pay off unless you own the mortgage MANY years

BUT HOWEVER there is currently an exception to this example. 

Fannie Mae and Freddie Mac are not currently buying non owner or investment loans right now. Some lenders are not offering them. We are but like others there's a loophole in using "origination costs." To get a non owner occupied loan today there is a pricing add of 2.75 percentage points which borrowers cannot be exempt or buy up. In this case the origination points are acting like a prepayment penalty to the borrower to pay for a more risk intense loan to lender. This second answer is not on your test, It's just information for you to dig further in your studies. Best of success!!!!!

Mortgage lenders prefer to be profitable.

Ken Jones, ASA | Broker & Appraiser nailed it. You can pay me now or pay me later. Yield i the goal.

It's a way for the lender to increase its yield on the transaction. Don't fall for it, usually not worth it, even if it brings down the interest rate somewhat.

To increase the lenders yield

You have some great responses here.  It all boils down to money in one form or another. 

You have many great answers.  

To pay your lender! ;-) 

for the bank to make money for processing the loan

"Origination Fees" cover various lender fees - these fees generally cover lender overhead (you'll often see within 'origination fees' itemization for 'underwriting fee', 'processing fee', 'admin fee', or something similar.  

Some 3rd party required vendors lenders must pay for and pass on to the consumer can also be included - 'tax service' fee is one example.

Any 'points' used to buy down an interest rate are not origination fees, but discount points (sometimes when discussing total costs, discount points are lumped into origination fees, but discount points ALWAYS buy down the rate)

Contrary to some answers here, origination fees do NOT include originator pay - since the Dodd-Frank act of 2015, loan originators are paid a set % or fee for every loan regardless of lender proceeds, points, fees, etc.  So an originator charging extra would not actually make the originator any more money (in the past, this was different).

While no one WANTS to pay fees, origination fees are necessary for staffing, overhead, and the techonology we use to provide great service and competitive rates - any lender NOT charging origination fees will pad their fees into higher rates.