Posted by Poppy on 10/23/06 1:21pm
Msg #154493

Paw???

If a borrower recinds and they have already paid for the appraisal does the broker have to refund them the money they paid out for the appraisal?

(I know we can't anwer the question for a borrower, I've just heard serveral LO's say no and I'm curious about what the truth of the matter is...
P.S If you can direct me to the proper source of information to obtain the answer that would be great! I've been searching through hud.gov but haven't found a definitive answer.

I would think that the Notice of the Right to Cancel makes it fairly clear but apparently not....

Thanks!

Reply by PA_Notary_II on 10/23/06 1:33pm
Msg #154496

Re: Appraisal Fee

Poppy: I'm no PAW, can't recite chapter and verse, but as far as I remember, appraisal fees are not refundable on rescission because it is a service that has been bought and paid for and is unrelated to the actual lending and credit process. Also I'm not an attorney, so this opinion is worth absolutely no more than the amount you paid for it. HAGD

Reply by hcampersFL on 10/23/06 1:38pm
Msg #154497

Re: Appraisal Fee

I'm not an attorney either but they way I have understood it is this. An appraisal is for the property and the Br's own the property and appraisal. It belongs to them and could be used for another loan etc. ( I know this never happens ). That is why they wouldn't be reimbursed. Does that make sense? Hell I'm probably not right anyway. lol.

Reply by PA_Notary_II on 10/23/06 1:43pm
Msg #154499

Re: Appraisal Fee

Actually, Bev I've never known a lender or broker that would accept an appraisal that was done for someone else. They're awful picky that way.

Reply by Poppy on 10/23/06 1:51pm
Msg #154500

Thank you, I appreciate the responses it makes sense...

FYI: when we purchased our home we did an appraisal and the LO did not respond to us afterwards it was the oddest thing. So we called another LO and he was able to get the appraiser to change the lender info on the appraisal so we could use that appraisal. Since the other broker did not pay for the appraisal yet and the new LO agreed to pay for it...
(sadly it turned out that the first LO had a stroke and that's why he was not returning his calls)

Reply by PA_Notary_II on 10/23/06 1:54pm
Msg #154504

Re: Thank you, I appreciate the responses it makes sense...

I've also known of appraisers that would reprint the appraisal for a different broker for a $50.
fee.

Reply by mtcwgrl on 10/23/06 1:53pm
Msg #154503

Re: Appraisal Fee

An appraisal is in the name of the lender or broker and can be transferred to another lender or broker with the permission of the lender or broker it was originally completed for. They just assign it to the new lender with an assignment letter. This is not done lots of times because the appraisal has not been paid for by the borrower. The appraisal and the credit report are not refundable by RTC because no loan decission can be made with out these items being completed. The borrower is required to pay for these items if the loan is going through or rescinded.

Reply by Stephanie_CA on 10/23/06 4:54pm
Msg #154562

Re: Appraisal Fee/hcampersFL

I think you have it right.

Reply by ReneeK_MI on 10/23/06 1:59pm
Msg #154505

Holding out for Paw, but here's my best guess ...

If the borrower pays for the appraisal outside of close, directly from himself to the appraiser, it could be seen as separate transaction. Interestingly - the appraiser is still going to need a request in writing to consider "transferring" the appraisal to another lender. Borrower's entitled to a COPY of it, but can't actually use it with another lender unless the appraiser transfers it.

If the borrower does NOT poc the appraisal fee - it will be charged on the Hud. If the loan rescinds - no monies will be collected or disbursed on the Hud.

That is likely WHY most of the time, the appraisal fee is paid direct. That's HOW appraisers get paid regardless.

Let's see what Paul has to say. I tried to find a quote out of Reg Z - but just don't have the ambition to read it all!

Reply by PAW on 10/23/06 2:15pm
Msg #154511

Re: Holding out for Paw, but here's my best guess ...

Though Title 12 does not specifically indicate that an appraisal fee is not refundable, it just about all cases, it isn't. The reason is the loose wording in Reg Z that says that a borrower is not responsible for fees associated with the loan:

(d) Effects of rescission.
(1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void, and the consumer shall not be liable for any amount, including any finance charge.

There are two fees that are typically charged, upfront, that are used for qualification of the borrower and is not a fee or charge charged in the production of the loan. Those two fees are the application fee and the appraisal. These to items are exempt from repayment due to rescission because they are completed prior to the loan process. (Though, for refinancing purposes, a lender's application fee is generally refundable, but a broker's fee may not be, depending on contract and state laws.)

BTW, just because a borrower/owner pays for the appraisal, the appraisal is the property of the lender, not the borrower/owner. As others of have said, some appraisals can be transferred from one lender to another, usually with a fee. There is a "special" recertification of appraisal (or something like that, can't remember the term right now) that an appraiser can do to reissue the appraisal, especially if some period of time has elapsed, without having to do a full appraisal all over again.

Reply by Poppy on 10/23/06 2:24pm
Msg #154512

Thank you, Paw and everyone else who helped out...

I appreciate the assistance. It's good to know... Have a great day! "smiles" Poppy

Reply by hcampersFL on 10/23/06 2:44pm
Msg #154518

Re: Thank you, Paw and everyone else who helped out...

When I had my house appraised the appraiser said that it was my appraisal. I told you I was probably wrong.

Reply by PAW on 10/23/06 3:32pm
Msg #154536

Re: Thank you, Paw and everyone else who helped out...

Only if YOU ordered the appraisal. Since the contract is between the lender (or broker) and the appraiser, it belongs to the company that ordered it. Of course, if you paid for, you are entitled to a copy of the appraisal, but don't ask the appraiser for it, you must ask the lender for it. (Even if the lender pays for the appraisal, the owner is still entitled to a copy of it, no matter if the loan is denied or approved.)

Reply by PA_Notary_II on 10/23/06 3:46pm
Msg #154540

Re: Thank you, Paw

I know that's correct because back when I was doing LO work, I ordered an appraisal from a RE brokerage that was in cahoots with a mortgage broker. They never delivered the appraisal to me and had my phone number blocked so that I couldn't contact them. When I found out that they gave my appraisal to a competing mortgage broker, I filed a complaint with the Licensing Bureau at the State Capitol and the guy was fined $850. He claimed the appraisal belonged to the bwr, whereas the LB verified it belonged to the party that ordered it. Dawg eat dawg fer shure..

Reply by John_NorCal on 10/23/06 9:36pm
Msg #154645

Re: Thank you, Paw and everyone else who helped out...

When I had my brokerage, there were a few times where a borrower who had gone through another broker came to me to submit his application with a different lender. As long as the appraiser was on the approved appraisers list with the lender, there was no problem. I would just call the appraiser, tell them that I was resubmitting the loan with a different lender and they would transfer it make out a new cover sheet for no charge.