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We have the following language in our note.
APPRISAL ADDENDUM. IF ANY ADOPTION OF OR CHANGE IN LAW OR REGULATION, OR IN THE INTERPERTATION OR ADMINISTRATION THEREOF BY ANY OFFICAL AUTHORITY, OR ANY REQUIREMENT OR CONDTIOTION IMPOSED OR RECOMMENDED BY ANY OFFICAL AUTHORITY , SHALL CAUSE BANK TO OBTAIN ONE OR MORE UPDATDTED APPRISALS OF ANY COLLATERAL SECURING PAYMENT OF THIS NOTE . CUSTOMER SHALL PROMPLTY UPON DEMAND BY BANK REIMBURSE BANK FOR THE COST OF EACH SUCH APPRAISAL.
According to part 323 appraisal regulations if you do anything with an existing loan you need an updated appraisal. So if we order an updated appraisal on a loan that we are concerned about , currently we eat the cost. The question we have is if we wanted to charge the consumer for this appraisal, how would we disclose it on the GFE & the HUD. It has been suggested by another bank that the charge is collected when the loan pays off. Our initial thought is that it would have to be disclosed somehow.
What are your thoughts?
In my opinion, this isn’t a settlement charge and it’s not even a charge you’re aware will occur, therefore, you can’t and aren’t required to disclose it on the GFE/HUD. The purpose of the language in your note is so that your borrower is aware that this might occur and agrees to that term in the contract.
We’ll see if Jack weighs-in with his opinion…
I agree with Robin. The note requires the borrower to reimburse you for future unanticipated events. As Robin stated, “It is not a settlement cost.”
The addendum does not allow you to be reimbursed for the cost of the second appraisal required for an HPML flip.
Since our note has the language “CUSTOMER SHALL PROMPLTY UPON DEMAND BY BANK REIMBURSE BANK FOR THE COST OF EACH SUCH APPRAISAL.” What is the best way to collect the fee and be compliant? Can we just send them a copy of the bill or can we add it to the loan as added fees and collect when the loans pays off.
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