On refinance loans do we have to go back to the previous loan and get the costs of appraisal, flood cert, title work and input those fees on the gfe for the new loan? In a recent webinar the question was asked " Do we still need to show the cost of the old appraisal for the new loan? We sometimes use an appraisal that was ordered for an earlier loan on the same property to the same customer." The answer was "technically yes. The GFE is to show every cost to the borrower and this includes verification documents. POC does not matter on GFE."
Is this true on refinances? Must the cost of previous appraisal, title work and flood have to be on the new GFE? It will look like this loan costs more that it does. Help!

My gut is no. If you are relying on previously paid for items, or not relying on any new items, I would not list or include them. Money (yours or thiers) was not put out there for the verifications for the refi, as long as you are truly using old docs and have not incurring any new expense.

Now, if you are having the appraisal 'reviewed' or getting a verbal update on a past title or letter report, and there is a fee assocuiated with that, then I would be listing and disclosing those costs, even if they are paid by you.

How is that so?

I obtained a loan 9 months ago and paid $350 for an appraisal.

Today I am applying to refinance that loan. Instead of ordering a new appraisal you are going to use the appraisal I paid for 9 months ago therefore you are using that appraisal in connection with the refinancing and I paid $350 outside of closing for that appraisal. Thus the "technically yes" answer.

I said it was my gut (and I am usually wrong in these things), and I will use my hardheadedness here, but if I am looking at this deal, for this deal the appraisal cost you nothing.

Why make up costs and expenses that do not exist?

Dan is correct. An appraisal was used for your new loan, the cost of which was previously paid for, so it would be shown as a POC.

Grrrr...

But we cannot show POC on the GFE so it looks like it is being charged again. So, we are to show any old verification docs like flood cert and title work (if we are not updating) on the new GFE for the new loan? Does any of this make sense?

You read my mind. And what about the HUD,do I show it on there as POC? On our consumer refi's we may use an old appraisal, and the invoice may not be in the original file. I guess I would have to go to the original HUD. Gonna love explaining that to a customer. Poo

No POC's are allowed on the GFE. Under the old rules, if the LO got a credit report fee up front, we poc'd it on the GFE. Can't do that anymore.

When something is paid is not a factor for completing the GFE. I agree - you must list all settlement services again.

POCs are just shown as credits in Block 2 now instead of being marked as POC.

You would show the credit report fee in Block 3 and then a credit in Block 2 to offset it. On the HUD you would mark it as POC on line 805.

We are listing them on the GFE and then showing it POC on the HUD if they were POC. I thought Block 2 is for a credit for the interest rate chosen. I'm not sure our institution would be listing anything in Block 3 that would have anything to do with the interest rate. The items we will be listing in Block 3 will be: Credit Report , Appraisal, Flood Cert and maybe a Survey.

Can you give me an example, just so I understand, when giving a credit in Block 2 for an item listed in Block 3 would apply.

If we show all poc's on a refinance as a credit in block 2 of the good faith estimate and an offset in block 3, how is the customer supposed to shop for their loan? I thought the whole idea of this new gfe was to give the customer something to shop with. Just because its a refi does not mean the customer won't want to shop around. How are they going to compare fees if we show ours as an offset? It would be apples to watermelons.

Appendix C.


In the case of "no cost" loans, where "no cost" refers only to the loan originator's fees, Line A must show a zero charge as the adjusted origination charge. In the case of "no cost" loans where "no cost" encompasses third party fees as well as the upfront payment to the loan originator, all of the third party fees listed in Block 3 through Block 11 to be paid for by the loan originator (or borrower, if any) must be itemized and listed on the GFE. The credit for the interest rate chosen must be large enough that the total for Line A will result in a negative number to cover the third party fees.

I thought a "no cost" loan was one in which the bank was waiving the fees. In the case of a refinance, since the fees were never waived in the first place and it was a charge incurred by the customer as part of the loan, I thought they should be listed as third party fees and explained to the customer that they were paid for in the original loan. I am getting different answers from different entities.
Anyone else have any thoughts?

Your total closing costs are going to be the cost of the appraisal less than anyone else's because it's already been paid for.

If they shop another lender they will have to pay a new appraisal fee therefore their fees will be higher for the refinancing with the other lender.

From the above cite.

to be paid for by the loan originator (or borrower, if any)

The appraisal fee in this case would, IMO be treated as a "no cost" fee. It has previously been paid for by the borrower.

This is my take on the situation, but with all the excellent clear guidance we have recieved from HUD that is exactly what it is. My take.

So IYO, if they already paid for the appraisal, it is considered a no cost loan?

i sent this information out to my loan officers and one responded with this question:

But what about the mortgage registration tax? This wouldn’t be collected on the new loan … sounds to me like we are going to need to disclose it.

I'm not familiar with a mortgage registration tax, but that sounds like that's a state, county or city tax that is specific to the transaction and it does not apply to a refinancing, therefore if the fee does not apply to a refinancing then it is not a fee associated with that transaction.

The appraisal (previously obtained) is being used in determining the value of the collateral for the refinancing, therefore it (and it's cost) is being used in connection with the refinancing.

Why would you not list the charge on the GFE Block 3 and then not list it on the HUD 1A. You would have properly listed the fee and there would be no tolerance issue.

Dan, if the customer already has home owners insurance in place on a refinance, are you saying that it should be shown as a credit in block 2 as well as in block 11 (they offset)?

Third party fees paid by the loan originator makes sense. Charges paid by the borrower makes NO sense....they are going to be paying the charges, whether already paid or paid at closing. If an appraisal is paid for a month prior to closing (because you collected the money up front) are you showing that as a credit?

If you read that for what it's worth, if a borrower is paying for an item (as opposed to financing it) would that not mean that every single 3rd party charge would be shown as a credit, using this logic?

Since the timing of a fee is not relevant on the GFE (no POC), then everything is listed. It doesn't matter if they already have it.

RRJ see if my last comment in this thread makes sense to you.

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1324508#Post1324508

I think I (am some of the rest) are misunderstanding something somewhere. I looked at the description you gave, Dan, and it makes sense to me.

What doesn't make sense to me is that if the borrower has already paid for their insurance (refi), I understand you still show the cost.

What I don't understand is additionally showing that cost as a credit in Box 2 (or any other POC items for that matter).