Financing in 85283>Question Details

Cramer, Home Owner in 85283

appraisal fee refundable on a refinance if the lender denies the loan

Asked by Cramer, 85283 Fri Dec 23, 2011

primary residence refinance. lender charged the appraisal fee to my credit card. appraisal was done. loan was denied but not due to the appraisal results. under regulation z, am i entitled to a refund of the fee?

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If a fee is collected as an "application fee" then Reg Z certainly applies, if it was collected as an "appraisal fee" and an appraisal was indeed completed, there's little recourse other than making a fuss with the lender and their management and maybe they may refund it to make you go away but I wouldn't count on it.

I've overheard conversations like this from management at large mortgage companies I've worked for in the past... That's why they want to call the upfront fee you're charged an 'application fee' whenever they can so they can keep the funds if you withdraw. While this makes sense from a lender's standpoint, one could argue equally as strongly from the consumer side of it. FHA doesn't allow a lender to collect an application fee so this fee should always be refundable if an appraisal order wasn't completed (or at least a partial if some work was done but a completed report was not generated).

Each lender will do things differently...

Best of luck.
1 vote Thank Flag Link Fri Dec 23, 2011
Did you rescind? The portion of regulation Z that would pertain deals with what happens if you rescind. If you were denied, you are out the fee. Even if you rescinded there is language that can and has been interpreted to mean that an appraisal is a third party fee that is nonrefundable.
1 vote Thank Flag Link Fri Dec 23, 2011
According to Reg Z, a consumer cannot be charged fees associated the refinance of a primary resdience if the loan does not close. In fact, the lender could approve your loan, you could sign your loan documents and still rescind within the three day "Right of Rescind" rules and the fees for all charges would have to be waived. You should contact your loan consultant. Take it up with management, if necessary.

@Terry, no company wants to refund the appraisal fee. I have seen some try to bullying the consumer; however, Reg Z is pretty straight forward. That is, unless a company has come up with a legal mumbo jumbo way to skirt Reg Z guides; personally I don't know how.
1 vote Thank Flag Link Fri Dec 23, 2011
Can I get a refund on my appraisal deposit if the appraisal wasn't performed.
0 votes Thank Flag Link Fri Dec 14, 2012
No you are not. Once the appraisal is completed you are not entitled to a refund if your loan is denied for any reason.

Marco Gomez
The Goodlife Team
Keller Williams Landmark
Serving Queens, Brooklyn and Nassau in NY
0 votes Thank Flag Link Mon Dec 26, 2011
What if I cancel it prior to the appraisal and want to pull the plug on the entire re-financing deal? The bank already charged my CC for the appraisal and says that the fee is non-refundable. Is it true?
Flag Tue Jul 23, 2013
It is unusaul for a lender not to [put your application through DU (desktop underwriting) to see if you will be approved for the mortgage before ordering an appraisal. I would speak to the manager to see if they used DU because if they didn't they should refund the money to you.
0 votes Thank Flag Link Sun Dec 25, 2011
Hello Cramer,

I have many friends in the lending side of the Real Estate business who would argue the money is nonrefundable. If you initiated an application and agreed to the "application fee" then whether or not you are approved for the loan, the fee will be charged (read the very small print). But as with any company, if you speak with management they would be more than willing to keep you happy (quiet). Be sure to speak with a manager, the last thing any mortgage company or banking institution wants is bad online publicity.

Jorge Vega
Keller Williams Realty C.C.G.
Phone: 773-349-2272
jorgevega4u@gmail.com
Web Reference: http://www.myownhome.info
0 votes Thank Flag Link Sat Dec 24, 2011
Why did they deny the loan? I have never seen an appraisal fee refunded before.
0 votes Thank Flag Link Fri Dec 23, 2011
Regulation Z deals with required disclosures of a lender to a borrower, fees and so forth. Appraisals are performed by third parties for a fee. This third party (appraiser) is not a party to the agreement and therefore not subject to the terms of either the purchase and sale agreement or the loan application.
A question need to be directed to the loan officer: Why would an appraisal be ordered before the file was completely underwritten and approved by the investor? Virtually any first year loan officer would know not to incurr a charge against the borrower until all the other underwriting issues had been cleared. It is time to have a heart to heart talk with your loan officer and seek repayment for the charge. Simply because they had your credit card number did not relieve them from defending you against unnecessary charges and fees. Regulation Z may not be the defense, common sense may be your argument.
0 votes Thank Flag Link Fri Dec 23, 2011
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