Appraisal Review Fee

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Question:

If our institution charges an appraisal review fee and the review appraiser is an employee of the bank, is that charge considered a prepaid finance charge for Reg Z?

Answer:

No, as long as you meet these conditions:

Paragraph 4(c)(7).

1. Real estate or residential mortgage transaction charges. The list of charges in Section 226.4(c)(7) applies both to residential mortgage transactions (which may include, for example, the purchase of a mobile home) and to other transactions secured by real estate. The fees are excluded from the finance charge even if the services for which the fees are imposed are performed by the creditor's employees rather than by a third party. In addition, the cost of verifying or confirming information connected to the item is also excluded. For example, credit report fees cover not only the cost of the report, but also the cost of verifying information in the report. In all cases, charges excluded under Section 226.4(c)(7) must be bona fide and reasonable.

First published on BankersOnline.com 3/02/09