- Feb 26, 2006
- Professional Status
- Real Estate Agent or Broker
As finalized, the revisions to comment 17(c)(6)-5 also provide that fees and charges that are not finance charges under § 1026.4 or points and fees under § 1026.32(b)(1) may be allocated between the transactions in any manner the creditor chooses. The comment provides an example
of the fees and charges that may be allocated in any manner the creditor chooses. The example states that a reasonable appraisal fee paid to an independent, third-party appraiser may be allocated in any manner the creditor chooses because it would be excluded from the finance
charge pursuant to § 1026.4(c)(7) and excluded from points and fees pursuant to § 1026.32(b)(1)(iii). This additional commentary addresses how disclosures may be made when an appraisal is used to establish the combined maximum loan amount for both the construction
phase and the permanent phase, a situation that commenters on the proposed rule specifically described. Creditors would conduct the same kind of analysis to determine other fees and charges that may be allocated in any manner.
A commenter representing a mortgage company supported the revisions but asked that the Bureau consider changing the good faith determination of tolerance for appraisal cost. The commenter asserted that appraiser’s fees should not be subject to zero tolerance because lenders may not know what an appraiser will charge.
In regard to the comment requesting the Bureau to reconsider the good faith tolerance determination for appraisal fees, the Bureau declines to address this issue in the final rule. The Bureau notes that the disclosure of the appraisal fee must be based on the best information reasonably available at the time the disclosure is provided to the consumer.
3. Uniform use. If a creditor chooses to use an average charge for a settlement service for a particular loan within a class, § 1026.19(f)(3)(ii)(C) requires the creditor to use that average charge for that service on all loans within the class. For example:
i. Assume a creditor elects to use an average charge for appraisal fees. The creditor defines a class of transactions as all fixed rate loans originated between January 1 and April 30 secured by real property or a cooperative unit located within a particular metropolitan statistical area. The creditor must then charge the average appraisal charge to all consumers obtaining fixed rate loans originated between May 1 and August 30 secured by real property or a cooperative unit located within the same metropolitan statistical area.
ii. The example in paragraph i of this comment assumes that a consumer would not be required to pay the average appraisal charge unless an appraisal was required on that particular loan. Using the example above, if a consumer applies for a loan within the defined class, but
already has an appraisal report acceptable to the creditor from a prior loan application, the creditor may not charge the consumer the average appraisal fee because an acceptable appraisal report has already been obtained for the consumer’s application. Similarly, although the creditor defined the class broadly to include all fixed rate loans, the creditor may not require the
consumer to pay the average appraisal charge if the particular fixed rate loan program the consumer applied for does not require an appraisal.
There is going to be some whining and gnashing of teeth over this.
AMC will be screaming AVERAGE APPRAISAL FEE.
And ghee whiz, when is an appraisal REQUIRED any more?
And by what requirement? The Lender's ? The TILA? The GSE's?
Oh, this is going ot be interesting.