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Collecting an Appraisal Fee for a HELOC

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Question: 
When can you collect an appraisal fee for a HELOC?
Answer: 

A HELOC, because it is an open-end extension of credit, is not subject to Regulation Z's TRID rules. It is, however, a federally-related mortgage loan under RESPA and the CFPB's Regulation X. Under section 1024.7(a) of Regulation X, the lender is required to provide the applicant a Good Faith Estimate (GFE) if the loan is not subject to TRID rules, and under 1024.7(h), HELOC disclosures required by section 1026.40 of Regulation Z satisfy the GFE requirement if they are provided at the time of application for the HELOC.

Under 1024.7(a)(4), the lender is not permitted to charge any fee other than the cost of a credit report before the applicant has received the GFE and indicated his/her intent to proceed with the loan covered by the GFE.

Substitute "initial HELOC disclosures" for "GFE" in the previous sentence and you have your answer: You can collect an appraisal fee once you have provided the initial HELOC disclosures and the consumer has indicated an intent to proceed with the HELOC as described in those disclosures.

First published on 12/27/2015

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