Just remember...The LO needs to earn a commission. The Origination fee is one way. Another is by them selling you the loan a point or two above the rate they could get you, or you can pay points to lower your rate.
My advice. Make them remove the orgination fee. If they won't go to another lender. They have to disclose to you where they are making their money. They won't do the loan for free, of course, but I would not pay a cent toward an orgination fee, but rather have it be a point that you pay to lower your rate. IF you plan on being in the house long term, then it would be worth it to pay the points up front. If this is not your last home, I would not pay for the points, but take a slightly higher rate.