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#2102764 - 10/12/16 09:56 PM In-House Property Evaluation on Closing Disclosure
ZmbRzr Offline
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Joined: Nov 2011
Posts: 129
On a Loan Estimate for a customer, we disclosed $500 for an appraisal under the 'Can Not Shop' section. We ended up doing an In-House Property Evaluation instead for which we charge $150. On the Closing Disclosure, this charge was disclosed under the section for Origination Charges' instead of the 'Did Not Shop' section so that the total amount of the origination section is now more than disclosed on the LE. We didn't actually charge more and the evaluation was given its own line. Is that the proper way to disclose this, or can we get penalized for having the total section increase from the LE?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2102802 - 10/13/16 02:26 PM Re: In-House Property Evaluation on Closing Disclosure ZmbRzr
Compliance NABW Offline
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That would be the correct way to disclose it, i.e. on the LE you would put the appraisal in Section B, whereas on the CD, you would put your own internal evaluation in Section A. I guess you could make the argument that the way it worked out was better for the borrower, i.e. he paid less. But, 0% tolerance items are a dangerous game. I would hazard to say that, unfortunately, what you described would require a cure, unless you as the lender do the appraisal yourself, in which case you could say you made a mistake and the appraisal should have been listed in Section A to begin with.

On a separate topic, I hope you met the criteria for doing an internal evaluation. I used to cite violations for that all day as a regulator.

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#2102813 - 10/13/16 02:40 PM Re: In-House Property Evaluation on Closing Disclosure ZmbRzr
John Burnett Offline
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John Burnett
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Cape Cod
There are two ways you could have handled this. The first is to use a more encompassing label, "Appraisal/Evaluation" (or in some jurisdictions "Appraisal/Evaluation/Survey") on both the LE and the CloD. Moving the cost from section B to section A should not cause a problem (although I have read here that some lenders have LOS problems doing that). Using the more encompassing label avoids the "new cost" LOS tolerance problem when you go from a $500 appraisal to a $150 evaluation.

The other way would be to issue a revised LE within three business days of when you learned that you'd be going the evaluation route. It's a changed circumstance, and you'd get the new fee timely set up for the good-faith tolerance determination. This method also should get around any tendency of an LOS to treat moves from section to section as a tolerance issue.

Because the Bureau puts so much attention on having identical labels for comparison between the LE and CloD, it's important to avoid situations like you've described, and the two methods above should give you "cover" on the issue. But on the loan you've described, I think I would document that the consumer received the benefit of a $350 reduction in actual cost from the estimated $500 appraisal fee, and not do a "cure" payment.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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#2102816 - 10/13/16 02:47 PM Re: In-House Property Evaluation on Closing Disclosure ZmbRzr
Compliance NABW Offline
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I agree with what John stated regarding the LE, but did not mention that because the scenario stated that the CD was already issued.

Hard to be sure about the other stuff. It's open to interpretation. A technical hard arse with the Regs might not be down with that, though I agree using a more encompassing term, such as "Property Valuation" would be a good idea if you are planning on doing this ever so often.

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