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#2213636 - 05/15/19 02:35 PM Withdrawn App Fees Argument
graygirl Offline
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Our situation:

HELOC app (2nd mtg) about to be withdrawn due to insufficient appraisal value (after 2 appraisals). Rather than requiring up front payment from the customer for these appraisal fees, our officer wants to just tack them on to our existing 1st mortgage loan. Um, this seems like a simple No to me, but knowing this officer i will need some "proof". Any quick Reg references?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2213638 - 05/15/19 02:37 PM Re: Withdrawn App Fees Argument graygirl
raitchjay Offline
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OK
Totally agree with you, and everything in TRID is about references to fees in association with that transaction. I'm interested in the first line though.....i don't see how this can be a withdrawal--sounds like a denial for insufficient collateral.
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#2213647 - 05/15/19 02:56 PM Re: Withdrawn App Fees Argument graygirl
graygirl Offline
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To clarify, we aren't actually denying the loan but the customer may withdraw if we aren't able to loan them the requested amount, based on a lower appraisal value...

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#2213648 - 05/15/19 03:00 PM Re: Withdrawn App Fees Argument graygirl
raitchjay Offline
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If you won't loan them what they requested, that's a denial. You may counter with a lower offer, but if they don't accept the counteroffer, it's still a denial, not a withdrawal.
Last edited by raitchjay; 05/15/19 03:02 PM.
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#2213665 - 05/15/19 04:53 PM Re: Withdrawn App Fees Argument graygirl
RR Joker Offline
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Agree with raitchjay that is would be a denial if the don't accept a CO and also agree you can't tack that on another loan with your institution. the LO had the opportunity to collect an appraisal fee when the customer gave intent. Aside from that...he can ask for the money, but that's all he can do.
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#2213839 - 05/16/19 09:23 PM Re: Withdrawn App Fees Argument graygirl
ComplyCycle Offline
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Furthermore, the bank can only request the appraisal fee payment if the applicant provided their intent to proceed. Absent the applicant's intent to proceed, the bank may not impose any fee on the applicant.

I also agree that this is a denied loan due to collateral valuation.
Last edited by ComplyCycle; 05/16/19 09:24 PM.
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#2213847 - 05/16/19 10:43 PM Re: Withdrawn App Fees Argument graygirl
rlcarey Online
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Well there are all kinds of problems here - what do you mean after two appraisals? You can't shop for value. Either you had an acceptable appraisal the first time or you did not. If you did not have an acceptable appraisal, then why would anyone (borrower or the bank) be paying for it?
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#2213868 - 05/17/19 01:47 PM Re: Withdrawn App Fees Argument graygirl
Dan Persfull Offline
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Bloomington, IN
I also agree with raitchjay and RRJ. If the applicant does not accept the counteroffer for the lower loan amount due to the value of the property then that is an outright denial based on value of collateral.

If the loan officer is wanting to "just" add the cost of the appraisal to an existing loan then quit frankly he obviously has no idea what he is doing.

Furthermore, the bank can only request the appraisal fee payment if the applicant provided their intent to proceed.

To the best of my knowledge there is no required "intent to proceed" for open-end credit.

I also agree with Randy's comments about "shopping" for value. If the loan officer had any dealings in this "shopping" then that is a direct violation of the appraisal rules since he should have not been involved in the appraisal process at all.
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#2213869 - 05/17/19 02:05 PM Re: Withdrawn App Fees Argument graygirl
RR Joker Offline
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Good point, Dan about intent and HELOC's...I've gotten so use to people calling a plain HE loan a HELOC and the fact this is in the TRID forum...I didn't even make the LOC connection...if it really is one.

Also agree on 'shopping' values.
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#2259956 - 09/20/21 09:16 PM Re: Withdrawn App Fees Argument graygirl
Tarhe Offline
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California
Piggybacking on this thread re: a Home Equity Line of Credit (HELOC). In the post above, ComplyCycle says that only upon receiving "intent to proceed" may the Bank collect the appraisal fee. But a HELOC does not have an intent to proceed. If we collected the appraisal fee up front after receiving the application, but then the HELOC is either denied or withdrawn later, must the Bank refund the appraisal fee? A copy of the appraisal would have been received and provided to the borrower already. My thoughts are "No" in this case, but wanted to confirm.

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#2259976 - 09/21/21 11:34 AM Re: Withdrawn App Fees Argument graygirl
rlcarey Online
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1026.40(d)(2) Conditions for disclosed terms. (i) A statement of the time by which the consumer must submit an application to obtain specific terms disclosed and an identification of any disclosed term that is subject to change prior to opening the plan.

(ii) A statement that, if a disclosed term changes (other than a change due to fluctuations in the index in a variable-rate plan) prior to opening the plan and the consumer therefore elects not to open the plan, the consumer may receive a refund of all fees paid in connection with the application.
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