Posted by ItsMe123 on 2/18/05 1:02am
Msg #21139

TILA Decision- Bad for third party vendors-Here comes flames

A recent case involving TILA was looked at. (sorry don't have the reference) It regarded the borrower getting all fees back on recission.(primary housing of course) It went to the high court and it was decided under TILA, borrowers are able to have ALL loan fees paid, including third party fees, refunded to them regardless of service rendered, on recission. I have to say I do not agree with this decision looking at all invoved in a transaction. Seems to me the borrower should be responsible for something. Particuar case dealt with an apprasial fee among others. This means if a loan cancels, ALL fees asscociated in doing the loan must be returned to the borrwer. Everyone of them. AKA--apprasier had to cough up refund check to borrower. Not good news for third party vendors including notaries. Now some of you will say--"well the lender should have to pay all the fees for the borrower to third party vendors---well that would mean the 100% commision LO would lose all the time spent in the loan and have to pay for the apprasier, the notary too (title may also require a charge for abstracting--depends on title--it would be stupid for them to charge). If you are ignorant enough of this business to make a comment like "well those LO's get so much money, blah, blah, blah", or "those lenders get all that interest on those others loan (in other words, you are clueless of the secondary market and what a broker vs lender vs servicer is and how loans are sold) you would be wise to not comment as it shows you have no idea of what an average LO closes in a month. So unfortuantly we along with apprasiers have to look as a recission as the cost of doing business although noone of course likes this. I hate to say it and I know I am going to get flamed but out of all persons involved in the loan process, it is the notary who has the least time/money investment. Now don't start your "but we have no vested interest and if we don't get paid it looks like we do"---that didn't work for the appraiser and as strong as the Apprasier Foundation (USPAP) is if they couldn't get a victory, a self-employed independent notary surely isn't What do all of you think?
Well start your flaming.

Also interesting enough if a borrower backs out of an application prior to signing or doesn't sign at closing, they are not entitled to get their appraisal cash back. Makes me wonder as more and more become aware of this if some borrowers will bring a loan to the table, sign it do for the sole purpose of getting their apprasier cash back. Pretty nasty as then so many will have lost time and money but you bet some will do it.

I highly suggest no notaries inform a borrower of this at the table just to try to get a loan signed so you foolishly think your chances of getting paid are higher (some notaries like to be "so helpful")---Obivously LO's and the such are not advertising this to the customers. A notaries advertising of this new requirement would be a sure fire way of losing business very quickly. Everyone from the appraiser to the title agent to the LO to the funding company to the SS would have your name on a list and the way faxes and emails fly in the origination business........be careful.

Reply by Art_MD on 2/18/05 7:06am
Msg #21147

The borrower has an agreement with the lender. I would think that it is the lenders responsibility to refund all funds to the borrower if recinded. If the lender wants to go after the signing service and title company for a refund, they can. If the SS or title company wants to go after the notary for a refund they can.

As for the appraiser having to issue a refund, often the appraisal is done outside of closing with the borrower paying the bill directly or indirectly thru the title company.

Art

Reply by Melody on 2/18/05 12:08pm
Msg #21199

adding to Art's comment

I have seen borrowers recind on a bad loan and then use the same appraisal (which they had paid for) on the application for a new loan.

In the particular example I am thinking of, the fees on the first loan were quite high. The borrowers were savvy enough to see this. They went with a different lender and got a good deal. I was called for both signings so I saw both deals.

Good for the borrowers!

Reply by Shane_IN on 2/18/05 8:53am
Msg #21151

This shouldn't effect what we do.

As public notaries we perform a service, and service companies will always get paid. We don't perform a service dependent on whether or not the loan funds. If the loan funds, we still performed our service, and will be paid accordingly. Any court of law would uphold this.... You'd probably have to do it in a smalls claims court, but you'd get paid.

If the loan rescinds, you'd find the lender/title company responsible for the payment.

Reply by ItsMe123 on 2/18/05 6:33pm
Msg #21282

No Shane, The court found the person collecting the fee

The court found the person collecting the fee was required to refund the fee. The apprasier was required to refund the appraisial fee. The court found as I earlier stated that ALL fees will be refunded for services performed. ALL FEES

Reply by Paul_IL on 2/18/05 11:57am
Msg #21193

I would love to have the specifics regarding this case as the law requires that appraisers be paid reqardless of the loan closing.

You are mistaken in regards to the appraiser having to refund his fee because the appraisers client was the lender and not the borrower regardless of who wrote the check.

This requlation is a RESPA requirement to protect the public by insuring that the appraiser opinion of value is not influenced by the loan status and will they be paid if the appraisal is too low or high for what the lender was wanting to justify.

Reply by ItsMe123 on 2/18/05 6:31pm
Msg #21281

No Paul--Unfortuantly I am not mistaken-ALL third party fee

The apprasier had to refund the borrower. I was schocked too, but ALL third parties who collected in this transaction had to refund the borrower. ALL third paries. I too thought it was conttary to RESPA but if you read TILA you will see a borrower is entitled to ALL fees paid reagrding the transaction and the apprasisal fee was considered related. I will find the case. It was first decided in the low court to have to refund, the borrower lost when it was appealed and the borrower won in High Court.

Reply by Paul_IL on 2/18/05 8:50pm
Msg #21296

Re: No Paul--Unfortuantly I am not mistaken-ALL third party fee

You are missing my point. The appraiser was contracted by the lender. Lender may have to refund but not appraiser as he completed an assignment and would by law still have to be paid by the lender.
Perhaps you might post a link to the specific case you are talking about as I can find no reference to it.

Reply by Loretta Reed on 2/19/05 10:02am
Msg #21353

Re: No Paul--Unfortuantly I am not mistaken-ALL third party fee

Boy, I hope borrowers do not find this website or learn anything about fee reimbursement. We might find ourselves paying out more than we make. I am keeping anything that I learn about this stuff to myself.