Posted by ItsMe123 on 7/4/05 5:32pm
Msg #49792

Regarding payment on loans that do not fund

I know most of you think that if a loan doesn't fund you expect payment. A lot of you back up your arguement that an appraiser is still paid when a loan doesn't fund. For once and for all that is not true per TILA and Reg Z.

Reg Z states exactly

"Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest"

and the Commentary to the Reg gets right to the nitty gritty

Refunds to consumer. The consumer cannot be required to pay any amount in the form of money or property either to the creditor or to a third party as part of the credit transaction. Any amounts of this nature already paid by the consumer must be refunded. ``Any amount'' includes finance charges already accrued, as well as other charges, such as broker fees, application and commitment fees, or fees for a title search or appraisal, whether paid to the creditor, paid directly to a third party, or passed on from the creditor to the third party. It is irrelevant that these amounts may not represent profit to the creditor.


So there goes the appraiser arguement---appraisers have been and if they have not ,they are now refunding the fee to the customer. Appraisers are not then charging the lender as they realize that the lender has taken even a bigger loss than they have and they don't bite the hand that feeds.

I, myself, do not argue to collect if a loan does not fund as I feel that due to TILA that it is the cost to doing business. If you do insist on charging and you now just became aware of the ruling in TILA just what is going to be your arguement? You can't say the old, "Well we are not supposed to have financial gain in a loan so it we don't get paid when a loan doesn't fund it shows financial gain" If this were true, don't you think an appraiser will still get paid? To go further if financial gain was your arguement, than title sure as heck would be able to keep their fee purely for the sake of their defined role in the transaction. I know you and I buy gas, paper, etc but so does everyone else in the industry. TILA doesn't care. Everyone loses money on a cancelation. I see the notary as having the least of all the loses--just time, gas and paper. The time we spend is the smallest time spent by all in the transaction, perhaps equal to or less than an appraiser. Just who do you think should pay you?

Perhaps this is another reason fees are so low. If we force those to pay us and increase the loss that those who hire us have on cancelations, are we forcing them to cover this on the loans that do fund?

Seriously, how many cancelations do you have? Don't you think you too could look at those as the cost of doing business? I will tell you this is one of the reasons that LO's at small mom and pop broker shops fret about looking at forming a business relationship directly with a notary. If they form a relationship with a notary who insists to the TC that they be paid on a cancellation, they know the TC will come back to the small mom pop broker shop for the notary payment title was forced to tender if they decided to.

If you want to market directly to the smaller broker shops who by the way does the majority of loans today (it is not the big retailers), this is something you had better consider.

Reply by Paul2/FL on 7/4/05 11:45pm
Msg #49814

Very enlightening post! It does make you wonder though how many of these mom & pop broker shops are operating on a shoestring!
I suppose one could argue that you could write off your loss on your taxes (paper, gas, vehicle wear & tear, etc.) but then you have to consider your time and, on occasion, the unpleasantness that goes with it. You can't write that off. This is not to say that I disagree with your position just making a point.
I do take exception, however, to your comment "I see the notary as having the least of all the losses-just time, gas and paper". I look at it from the standpoint that its all relative. Since we don't know what the profit margin is for the appraiser, TC, and lender from the settlement costs, we can't make a judgement that the notary has the least to lose. The notary's "cut" is the smallest portion of these costs so therefore the notary's expenses etc. are probably equivalent.
Remember, the average Independent SA is not making big bucks (regardless of what the NNA says) so every dollar is very important. Accepting cancelations as "the cost of doing business" while noble and possibly the right thing to do, can have a dramatic affect on one's bottom line if too many are accepted.

Reply by Anon on 7/5/05 9:34am
Msg #49830

Have you ever been told that the loan recinded, and then see it recorded in the Court House with your seal and signature? I have, the SS was scamed as well as me.

Reply by BeccaFL on 7/5/05 1:44pm
Msg #49884

As far as the appraiser not getting paid... I have not seen that happen. Typically the mortgage company is the one who orders the appraisal, credit report, courier, and other expenses required to get the loan approved. If the loan does not close the invices are still sent to the Mortgage Company and they have to pay them! They are by far the worst off when this happens. The appraiser may not be able to collect from the buyer, but the invoice is directed to whoever ordered it, as well as when the title co orders survey and termite. I guess I would try to invoice for the fee if you get it great, if not then write it off an move on. In my experience the "mom and pop" mortgage companies are already getting hit for a lot of fees on the loans that do not close...

Reply by Anon on 7/5/05 1:56pm
Msg #49888

just asked a mortgage branch manager about this and was told that they do pay all the vendors. The mtg co. takes the loss