We are currently offering a promo rate for our HELOC product. In order to qualify for the promo rate, the LTV must be less than 80%. What we are seeing is the customer makes application and tells the lender that the LTV is less than 80% so the promo rate disclosure is provided but when the appraisal is completed the LTV may be 90%. Can we provide the new early disclosure to the customer or are we required to give the promo rate? The disclosure has the statements saying "All of the terms of the Plan described herein are subject to change. If any of these terms change (other than the annual percentage rate) and you decide, as a result, not to enter into an agreement with us, you are entitle to a refund of any fees that you paid" and "We may make changes to the terms of the plan if you agree to the change in writing at the time, if the change will unequivocally benefit you throughout the remainder of the plan, or if the change is insignificant", would either statement help close the loan with the regular rate and not re-disclose?

You would provide them the new plan document when you made the counter-offer.

The applicant does not qualify for the program. You make them a counteroffer for the program they do qualify for. If they accept provide them the new disclosure and proceed to closing, if they do not accept deny them for LTV.

If the applicants request a refund of their appraisal fee at that point, must we refund it? We've just recently had a question come up. Still investigating the situation, but thought I'd get some expert input.

Also, in a related situation, if the applicants have not paid the appraisal fee at the time they refuse the counteroffer, can we still attempt to collect the fee?

How do you time your fee collection on HELOCs? Just a little confused on the commentary on refunds at the moment, I guess.

Thanks!

Unless something in state law would require it you would no be obligated to refund the fee for the obtained appraisal? You are not changing the terms of the plan. You have denied them for the plan applied for and are offering them a different one.

If you ordered an appraisal without collecting for it then sure you can attempt to collect it but absent a signed agreement they agreed to pay for it most likely your chances of collecting are slim to none.

Thanks, Dan.