We seem to be having a number of issues related to the initial "good faith" estimate of appraisal fees. According to the 1026.19(e)(1)(i)-1 the 'reasonably available" standard requires that the creditor, acting in good faith, exercise due diligence in obtaining information. When we are only being provided the property address, how much due diligence is everyone doing in order to obtain a good appraisal fee? Are you putting that the appraisal fee is an estimate on the initial LE? If so, how do regulators look at that when it's in a zero tolerance threshold? Any feedback would be greatly appreciated. Thanks!

Are you putting that the appraisal fee is an estimate on the initial LE?

What do you mean by that? Everything on the LE is an estimate. You have to give them a good faith estimate of the cost, usually based on location and a standard single-family dwelling, unless you have knowledge of otherwise. If it turns out not to be a single-family dwelling later or it has a lot more land than a standard lot and the price goes up, then that would be a valid changed circumstance. Usually, you can look all of this up on the internet before providing an estimate though.

Today the business line is not putting estimate on the LE. We are seeing CIC related to water front property or jumbo loans. We know the dollar amount of the loan prior to issuing the LE but just using the base price for a SFD standard price which I don't think it's valid. As it relates to waterfront property, we can locate the property on the map but just don't know how much is really required in researching. Within the last year, we have just had an abundance of CIC. Thanks!

You can't start with no appraisal fee and then claim a valid CC and magically add an appraisal fee, if that's what you're saying.

Sorry, maybe i misunderstood....when you said "today the business line is not putting estimate on the LE", i read that as "we aren't quoting an appraisal fee." But maybe that's not what you meant.

If you have a property address, then you have at your fingertips the location of the property and most likely the nature of the property. When they are claiming a changed circumstance, what changed?. Other than the fact that they were too lazy to do any due diligence to develop a "good faith" estimate of the costs?

"Within the last year, we have just had an abundance of CIC."

If Loan Estimates have been given with no appraisal cost at all and then one is added later, your bank has set itself up for a pattern and practice violation of TRID. There's no valid Changed Circumstance for adding the cost later when you had the address to begin with. If nothing else, call any appraiser, give them the address and ask for the cost. It's really just that simple.

Also, if you have an abundance of changed circumstances that is just a huge red flag that you have a pattern and practice of failing to give good faith estimates whether you think your changed circumstances are valid or not.

Pattern and practices of this nature are never good when it comes to examination time. If the examiners smell blood on the water, be prepared to go back five years and refund all of these changed circumstance appraisal fees.

Sorry, I'm sure I could have said that better. We always provide an appraisal estimate on the LE but just a base price with no "add ons". For example, if the base appraisal fee is $515 but if it ends up being lake front property (we can easily find out if we have the property address) but on average the appraisal would add on another $300 to the $515. So the LE should have reflected $815. Instead we are only listing $515, not doing any due diligence and instead waiting for the appraiser to tell us that it's lake front property then doing a CIC as they are saying they didn't know.

Currently we have made the business line send out refunds but I start to second guess myself by telling them to ensure they are doing a valid estimate with the initial LE and how far they need to go.

This seems like an unreasonable lack of diligence.

If the bank is aware of the fact that there is a premium price for an appraisal of waterfront property, and if there are more than a few waterfront properties in its lending area, the bank should check the address (when known) to see if it's waterfront property before providing the initial loan estimate. Estimates must be "based on the best information reasonably available at the time the disclosure is provided to the consumer." (12 CFR 1026.17(c)(2)(i)).

In your scenario, there is no support for increasing the basis for the appraisal cost disclosure via a revised loan estimate. You cannot correct mistakes and oversights using revised loan estimates.

I have a good faith question. The lender will do a construction loan for a pole barn like home and it located 20 miles out of town.
The lender quoted $700 on the LE for a to be completed appraisal for a construction loan. The appraisal request was declined by 3 appraisers and they finally found one that would do it for $1500. It's an odd property for the area, harder to find comps and there's mileage. They said they didn't do any 'home work' before the initial LE was provided to account for the odd property or mileage. They now want to do a revised LE for the appraisal cost of $1500. Do we have a valid change in circumstance reason?

They said they didn't do any 'home work' before the initial LE was provided to account for the odd property or mileage.

Bingo - lender error or laziness is not a changed circumstance.

That's exactly where I was leaning, thank you Randy!