Financing in Germantown>Question Details

Ken, Home Buyer in Germantown, MD

Hi, Do I have to pay for the appraisal fee if we withdrawl the refinance application after settlement?

Asked by Ken, Germantown, MD Wed Jan 21, 2009

Hi, I went through a settlement process of a mortgage's refinance with my loan agent in October of last year. We signed the document at the settlement. For this particular refinance, the appraisal fee is to be covered by the new loan. However, the loan did not get through final approve by the bank. We end up withdrawing the refinance process. My loan agent has asked me to pay the appraiser for the appraisal fee, she has put a threat against me (in writing) that she will ruin my credit score, and charge me for additional fee I don't pay the appraisal fee immediately. My response to her is that I was not the one who put in the order for the appraisal. She was the one who approached me for doing the refinance and advise that the new loan will cover the appraisal fee. But of course, the refinance never occur due to the reason I stated earlier. Therefore, I do not see a legitimate reason to be responsible for this appraisal fee. Would you please advise if I am correct in this case?

Help the community by answering this question:


Was your mortgage agent foolish to not collect payment up front? YES
Was she acting in good faith with you that the loan would close and the fee would be paid for at close? YES
Is it ultimately your obligation? YES
Can she place a collection on your credit for the fee? YES
Will she? NOT SURE
Should you pay? Up to you

Ultimately the fee is going to go back to the loan officer because she basically ordered it on credit with the appraisal company. She should have collected a check from you to pay the appraisal in the event something happened during the underwriting process. I think that you 2 obviously had a miscommunication about the fee but it was ordered on your behalf and should be paid by you no matter what. Whether she has a legal right to collect, maybe that's another story.

It's kind of like you went to the Melting Pot, had a great cheese fondue and dinner and then burnt your tongue on the chocolate. Now you want the meal for free because the waiter did not properly tell you about the possibilities of burning yourself and missing out on the sheer delight that a chocolate fondue desert can bring.

I don't think that you are wrong for not wanting to pay but try and be fair about it and come to a resolution. If you can use the appraisal with another bank to refi, call the LO, offer half and request a copy of the appraisal. A bird in the hand is worth 2 in the bush to her. Remember, she has to pay for it regardless. It would sound like a good deal if it were me. Good Luck!
1 vote Thank Flag Link Thu Jan 22, 2009
I'm in a similar situation. My loan officer asked me for my credit card number in order to hire the appraiser, but he specificially told me that I would NEVER see the charge on my credit card because the appraisal fees would come out of my closing costs. As it turned out, the guy appraised my house (which I bought only two years ago) at $50K less than what I purchased it for. So, I no longer have the ability to refinance. On the day the appraisal papers showed up in my mailbox, the $380 appraisal fee was taken out of my credit card!!!
0 votes Thank Flag Link Thu Feb 21, 2013
Hi Ken - There would have been an appraisal charge - no question. The mortgage broker would have been invoiced for this from the appraiser. When you say "the appraisal fee is to be covered by the new loan", this tells me that this loan charge -- in addition to other charges -- would have simply been added to your mortgage amount. So, as a simple example, if your old loan balance was $400,000 and you had a total of $4,000 in taxes and fees to re-finance, then your new re-financed balance would be $404,000. You would still be paying for these fees. But instead of paying $4,000 at settlement, you pay it every month in a higher monthly payment. To me, having these fees rolled into your mortgage has nothing to do with your liability to pay for the appraisal.

I think that your only argument is that you agreed to pay for an appraisal *only if the refinance was successful*.

Have the mortgage broker send documentation to you that you signed committing you to this charge even if the re-fi didn't go through. If she can't provide this documentation, then have a lawyer send her a letter. It's either that, or pay her to go away. I don't see any other options. Good luck.
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0 votes Thank Flag Link Thu Jan 22, 2009
Thanks everyone for your advise. I reviewed the settlement documents. There's nothing that I need to pay the appraisal fee if the refinance was withdrawl. On the settlement sheet where all the calculations are shown, it's clearly indicated that the appraisal is to be covered by the loan which never occur.

Am I still correct in this case where I am not obligated for paying the appraisal fee ?
0 votes Thank Flag Link Thu Jan 22, 2009
I agree with Bruce's answer, asking an attorney is the best bet, Try calling one for an opinion on this one, especially since their language has become so threatening ! They are most certainly not action professional in my book, for a quick answer you can all our closing agent in Germantown, Tennessee if that is where you are located- Service first title & escrow, llc,# 327-3877-let me know , I am interested!
Patty Everitt
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0 votes Thank Flag Link Wed Jan 21, 2009
Hi Ken - I'm not an attorney, so I'm not qualified to give you the best advice. I can tell you that there would have been a charge for the appraisal. Appraisers will charge the mortgage broker for their service, and then the mortgage broker will collect the fee from the home buyer. The fact that this charge would have been included into your mortgage doesn't eliminate the fact that the cost was incurred. Also, an appraisal is required in just about all finance/re-finance situations.

Here's what I would do:

1. I would review the mortgage application that you provided to your broker. If you owe an appraisal fee, then you would have agreed to it in this document. If you can't find specific contract language that says you must pay for an appraisal with or without an approved loan, then your mortgage broker should provide it to you.

2. Before the appraisal was ordered, she should have completed the loan application and run a credit check. Normally, the appraisal is ordered after everything looks OK. From a common sense/business perspective, she should take responsibility for this charge if she ordered the appraisal prematurely.

3. To be done with it, you could offer to split the fee. If you do this, get a copy of the appraiser's invoice so you are splitting the actual charge to her. An appraisal normally doesn't cost more than a couple hundred dollars. I hate to say it, but often it's easier to "settle" this to eliminate the hassle.

4. One last strategy - get a lawyer to send her and her boss a letter indicating that you will come after them with guns blazing if she does anything to damage your credit by trying to extort a bogus charge (assuming they messed-up). This strategy can cost time, money and aggravation, so you may want to re-consider #3.

Again - I'm not an attorney. See what's in writing and then go from there.

Good luck. I'm sorry you have to go through this hassle.
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0 votes Thank Flag Link Wed Jan 21, 2009
Ken, Jon Tucker with RE/MAX 100.

It depends on any application language/agreement you signed. If there was none, then you are not liable. Threatening to "ruin your credit" is highly unprofessional and maybe unethical in Maryland. It may also violate the Fair Debt Collection guidelines. Advise the loan officer you will discuss this with her manager and possibly complain the Maryland Real Estate Commission. They may be licensing loan officers now; check with them. Just Google Maryland Real Estate Commission.

Good Luck, Jon
0 votes Thank Flag Link Wed Jan 21, 2009
Yes, you need to pay the appraisal fee. It was ordered on your behalf for the refinance. The appraiser is independant and needs to be paid for the job he has done, whether you proceed with the refi or not.
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0 votes Thank Flag Link Wed Jan 21, 2009
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