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#21947 - 06/26/02 01:43 PM Prepaid FC - Appraisal Waiver Fee
BKB Offline
100 Club
BKB
Joined: May 2002
Posts: 120
Midwest
Wouldn't an appraisal waiver fee be considered a prepaid finance charge? This fee would be charged to a customer in a secondary market transaction in cases where the customer's credit scores, LTV, etc. met certain thresholds that the investor would not require an appraisal. But to take advantage of this streamlined process, the customer would have to pay $50 to waive the appraisal. I believe the investor would get the $50.

Any thoughts?

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Lending Compliance
#21948 - 06/26/02 04:33 PM Re: Prepaid FC - Appraisal Waiver Fee
JulieB Offline
Junior Member
JulieB
Joined: Apr 2002
Posts: 38
SC
Just curious - how can LTV be determined without an appraisal?

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#21949 - 06/26/02 06:09 PM Re: Prepaid FC - Appraisal Waiver Fee
BKB Offline
100 Club
BKB
Joined: May 2002
Posts: 120
Midwest
In a purchase transaction, the sales price. I am not sure of all the requirements of the investor, only that if the applicant meets the investor's guidleines then they have the option to pay $50 to waive the appraisal.

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#21950 - 06/26/02 07:03 PM Re: Prepaid FC - Appraisal Waiver Fee
Anonymous
Unregistered

The simple answer to your question is “Yes.” By definition, a finance charge is the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit. It does not include any charge of a type payable in a comparable cash transaction. In this example, it makes no difference if an appraisal is warranted or not. The appraisal waiver fee is a condition imposed on the borrower not seen in a comparable cash transaction and therefore, a prepaid finance charge.

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#21951 - 06/26/02 07:26 PM Re: Prepaid FC - Appraisal Waiver Fee
BKB Offline
100 Club
BKB
Joined: May 2002
Posts: 120
Midwest
That is our thinking as well, but since this was a "new" type of fee, at least to us, I thought I'd ask to get a better comfort level with our decision and to see if other banks are treating it the same way.

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#21952 - 06/26/02 10:27 PM Re: Prepaid FC - Appraisal Waiver Fee
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,097
Toano, VA
Junk fees are almost always FCs.
_________________________
...gone fishing.

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