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.
@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.
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.
Keller Williams Realty C.C.G.
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.