In obtaining any loan, there are fees involved. The question is who pays them. In a no point no fee loan, the lender is paying all of your fees. Why? Because they are getting a higher interest rate on your loan. Every loan program offers a tradeoff between up front costs and long term interest rate. You can pay extra (additional loan points) in order to lower the rate, or you can get the lender to pay you (rebate points) in exchange for a higher interest rate. These rebate points are then used to pay your closing fees.
BEWARE - there is no such thing as a no cost loan - no points and no fees up front mean that you are trading off for a higher interest rate - run the numbers or have your loan broker help you figure out your best option.