can we pass the fee for a construction appraisal inspection on to the customer?

does this have to be disclosed on construction loan docs?

thank you in advance

1. Governed by state law.
2. If you expect to collect fees, they must be spelled out somewhere in the contract--consult local counsel for guidance. For loans subject to TIL, "inspection and handling fees for the staged disbursement of construction-loan proceeds" are Finance Charges. If collected at or before closing or withheld from draws at any time, these fees become Prepaid Finance Charges that would be detailed in the Itemization of Amount Financed.

thank you very much, i thought there were TIL ramificaitons if we had not disclosed at the time of the construction loan origination.

From your questions, I'm not clear about your exact concern. Are you asking whether "inspection and handling fees for the staged disbursement of construction-loan proceeds" must be included in the FC and APR calculations, or how these amounts must be presented on the disclosure form? "Inspection and handling fees for the staged disbursement of construction-loan proceeds" are always FCs and they must always be reflected in the APR calculation. Only if these fees are also Prepaid FCs will they be detailed on the TIL disclosure form.

sorry let me clarify. right now we order an as completed appraisal before the loan is originated. We allow up to 6 draws for the completion of the project. around the 2nd or 3rd draw and half way point of the construction loan being fully drawn, we order a construction appraisal inspection. we would like to pass that cost on to the borrower (if possible?). We are not currently collecting up front for this construction inspection or disclosing that it will be assessed later.

looking for a recommendation of how we can develop a process to follow up on the constuction of the dwelling while not eating the consturction inspection fee.

Our appraisers generally charge $75 per inspection. We put $300.00 into each consumer loan as a prepaid finance charge for 4 inspections. If there are more than that then we have to eat the cost.

Does this make sense?

that makes sense. i believe we used to do something similar but had our hand-slapped for not tracking whether or not the borrowers used all the pre-collected funds and not issuing refunds when funds werent used.

So if we disclose $150 as a PPFC (we usually only do 1 and our appraisers usually charge $150.00 per inspection) and collect at closing we should be good? With appropriate tracking on the back end of course.

Talk to your attorney as to how to structure your agreement to collect the fee. The fee will be a finance charge and your TIL disclosures will have to properly reflect the future anticipated fees.