need a little help ....

on a refinance of a consumer mortgage with additional funds for a remodel we disclosed (and charged the borrower) that the appraiser will be performing the inspections before the draws. however, a bank employee performed the inspections. Now management want to know if the bank can keep the funds for the services rendered. It seems deceptive to me, something doesn't seem right about keeping the funds but I can't put my finger on it.

thanks in advance

any thoughts would be appreciated ....

I would agree that you shouldn't retain those fees if you don't customarily charge borrowers for employee inspections. It certainly sounds deceptive to me. Refund the fee or have the appraiser perform the inspections.

If you charge subsequent inspection fees upfront at loan closing, they should appear in Section A of the LE and CD and be treated as finance charges. Who you end up paying to do them (yourself or a third party) is moot.

the fees were disclosed in section "B services borrower did not shop for" as going to the appraiser.