The buyer paid (outside of closing) an appraisal fee of $450 (charged after the borrower expressed an intent to proceed).
This “POC” fee is indicated on page 2 of the HUD1 as $450. However, the actual amount of the appraisal cost was only $420, and noted on page 3 of the HUD. We do not know the actual cost of the appraisal until the report is completed later in time. On page 3 of the HUD-1, the aggregate of fees (to include the appraisal fee) are within the 10% column and are not exceeded beyond that threshold.

Would our institution be obligated to issue a cure for the appraisal?

I'm under the impression that if the aggregate of all applicable fees are within 10% tolerance, then no cure would be necessary; even if the borrower paid a high cost for the appraisal.



Please cite any regulatory sources and any other applicable references...

I would be concerned about 'unearned fees' in this case. It would never occur to me to keep any portion of a 3rd party charge over and above the charge.

If my FI were to charge a review charge, for instance, it would belong in 801, so I see no correct thing but to refund this difference. It really has nothing to do with tolerance...it has to do with overcharging and keeping an unearned fee.

In addition, what you have actually done is padded your tolerance as the higher amount shows on the GFE side and a lower amount shows on the HUD side...tolerance is allowed for the opposite (actual cost higher than estimate).

http://www.bankersonline.com/regs/12-1024/12-1024-014.html

That makes perfect sense. Thanks for putting this scenario into context for me.

RRJ,

How do you record the refund on a HUD1?

A refund of a 10% tolerance is generally shown as a credit to the borrower in the 200's.

thank you.