We had a request for two refinance loans. The collateral for one was the borrower's primary residence, and the collateral for the second was for the borrower's hunting land in another state. We got appraisals for each. The second refinance loan fell through. We proceeded to close the first loan and included the appraisal fee for both the primary residence and the hunting land in the loan amount. The hunting land was not taken as collateral for this loan. Is this a violation of any regulation?

None that I know off, but unless you included the additional appraisal on the GFE, and I don't know why you would have, you probably are going to have tolerance issues. Why don't you just collect the fee directly from the borrower instead of messing around with the applicant's loan for their primary residence which already has enough risk involved in messing it up??

I do assume that you have a written agreement supporting this charge??

The initial GFE showed $1,000 for the appraisal fee. We redisclosed the GFE due to a decrease in the loan amount, and the redisclosed GFE shows $1,250 for the appraisal fee. This includes $800 for the primary residence appraisal and $450 for the hunting land appraisal. The $1,250 total is also reflected on the note. Not sure why they did it this way.

Adding the additional appraisal was not a change in circumstances and you increasing the appraisal fee on a subsequent GFE is a violation - plain and simple.

The changed circumstance was an approximate $40K decrease in the loan amount, not due to the appraisal charge.

But the only thing that should have been changed (on the GFE) during that re-disclosure was any fee directly related to the loan amount decrease.

The appraisal fee increasing would not be directly related to that and therefore should not have been changed.

Ah, I see. I misunderstood. I'll pass that on to the loan department. Thank you both for your help.