I provided my credit card info to broker to order appraisal. after the appraisal was don the loan was declined. Am I entitled to refounf of my appraisal fee since it was done in order to complete the refinance. There was no problem with value. Loan was declined after I was pre approved.
The fee for an appraisal is not a profit generator for your lender. It is a cost of doing the loan, and the fee goes to a third party. So the lender does not have this money to give it back to you. Refunds for appraisals are not generally issued, but you are entitled to a copy of the appraisal.
What I find interesting is that you say the value was not a problem, and that you as a borrower were pre-approved, yet the lender did not close on your loan.
Normally I advise people to hold off on paying for an appraisal until they know they have credit approval. That means that they are cleared to borrow the money, and that once the property is approved, the mortgage should fund. Yet you say that you had credit approval and yet were ultimately declined. I can think of a couple of reasons why that might have happened.
1. You confused pre-qualified with pre-approved. Pre-qualified means only that given the information that you have provided to your loan agent, you should be able to get loan approval. At that point, however, an underwriter has not looked at your documents and approved you formally. Pre-approval, or credit approval, means that you have applied for a mortgage, your income, credit, and asset documentation has been reviewed by an underwriter, all questions have been answered and conditions cleared, and that you are only waiting for the property to be appraised and approved to close your loan.
2. The property was found to be unacceptable, even if the value was okay. I have seen cases where the property appraised for much more than the sales price, but it was so unusual that the lender would not take the chance of financing it.
**3. You did not pass the lender's final quality assurance check. **These days, lenders may pull your credit again just before closing to make sure that you have not taken on additional debt, shopped for more new credit, or damaged your credit with collections, late payments, or legal filings. The lender may also do an eleventh hour verification of your assets or employment. If anything has changed for the worse since you secured your credit approval, your mortgage may not close.
Because of the Home Valuation Code of Conduct (HVCC) you may not be able to transfer your appraisal to a new lender, but you should get a copy and submit it with a new application anyway. That may forestall a last-minute loan decline if the property was the issue with your last lender.
No, you would not be entitled to a refund of the appraisal fee. The broker orders the appraisal and the appraiser performs a professional service by appraising the property, so the appraiser is entitled to be paid regardless of whether the loan is made or not. In fact, it would probably be a violation of the mortgage brokerage law for the broker NOT to pay the appraiser. Certain "third party" fees, such as appraisal fees and credit report fees (and sometimes, title insurance and survey fees) are typically not refundable even if the loan is not made. This is the principal reason brokers collect the appraisal and credit report fees "up front" -- so the would-be borrower does not refuse to pay for these items if the loan is declined. The only situation where you'd get your appraisal fee back would be if the refinance loan DID close and you rescinded the loan within the 3-day recission period allowed by the Truth-in-Lending Act. In a recission, you get back ALL your loan related fees, including third party fees.
By the way, you are entitled to a copy of the appraisal, since you paid for it. Be sure and ask the broker to provide the copy.
Within 30 days the broker has to supply a status letter to you stating why the loan was declined, you might try calling to find out sooner. If you were pre-approved and no adverse items have come up since then you should get the loan. The appraisal fee is not refundable if the disqualification for the loan rests with you. You are also allowed to have a copy of the appraisal. Most importantly you should find out why your loan was declined, then you can make a determination as to whether or not you are intitled to a refund. I am interested to see what reason was given for the denial of the loan.
I am sorry that you have found yourself in this situation. Unfortunately, or fortunately, you are not alone. The current underwriting environment frequently uncovers information in a file that results in a decline even after your broker or originator issued a pre-approval. Without knowing the details of your situation it is impossible to know if your experience could have been avoided.
Regarding your question, it is standard industry practice to collect the appraisal fee from a prospective borrower up front and apply the fee to a competed appraisal regardless of the loan's outcome. The appraisal is a 3rd party fee that is generally considered the borrowers responsibility to pay. Once the appraiser completes the appraisal and delivers it to the lender, he or she is expecting to be compensated for their work. Generally, the lender or broker does not pay this cost. I understand the frustration involved in paying for an appraisal on a loan that did not get approved, and it is a good professional practice for an originator to ensure that a borrower understands that they will be responsible for paying the appraisal fee regardless of whether or not the loan is ultimately approved and/or closed.
Taking the above into consideration, if you feel as though you were not adequately informed regarding your responsibility to pay the appraisal or feel as though the pre-approval you received was not diligent enough to ensure that you would reasonably be approved, then you should definitely speak with management ot the mortgage company who was handling your loan. You could also apply at another mortgage company and use the current appraisal that was done in an effort to complete the transaction.