If the LE appraisal fee was $450 but the actual appraisal fee was $500, the financial institution can (1) only charge the borrower $450 ($450 in the borrower-paid column on page 2 of the closing disclosure and $50 in the paid by others column -- with or without the (L) symbol; OR (2) put the full $500 in the borrower-paid column and increase the Lender Credits in section J by $50. It does not do both. Be careful that a finance charge isn't mishandled by your system if you split the cost on page 2 between the borrower and the lender.
If you can do it, method (1) is preferable, since it can avoid all the "increased by more than allowed" language in the Calculating Cash to Close table and in the Lender Credits area.
But for a given service, you should never be using both method (1) and method (2).
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8