It appears you are buying in Los Angeles. If you are, you will not be charged a fee to waive escrow impounds, California doesn't allow it. Please note however that some lenders get around this by pricing their loans as if everyone was waiving impounds and offer a credit to those that do impound. The fee for waiving impounds does not affect the rate, it affects the points. The fee of .125 to .25 is the cost to acquire the rate. For example, if you were getting a 4% rate at par, meaning at no cost, you would not have to pay .25% of the loan amount to get the same rate. Again, this doesn't apply in CA but what you may see is the 4% rate with a cost of .25 unless you decide to impound and then you would get the 4% at no cost.
It's a shell game of sorts and quite silly but the bottom line is that the answer to your question is yes and no. Please also note that California law does not allow a lender to force impounds if your LTV is under 90%, not 80% as in most other states. By under 90% I mean 89.9%. At 90% you must impound. Smart loan officers rarely write loans in CA at 90% LTV for this reason, it gives consumers more options to structure it at 89.9%