Can you order the appraisal before getting intent-to-proceed?
Looking for ways to speed up the mortgage process, perhaps only in special cases where you're willing to gamble on a good borrower?
We all know the general rule about charging borrowers for fees prior to closing.... let us "Spillane" some of the nuances. (terrible, I know)
General Rule: Cannot Charge Borrower Until Getting Intent-to-Proceed
So generally speaking, with the exception of a credit report, we cannot charge the borrower for any fees until we deliver the initial disclosures (in October we'll call it the Loan Estimate) and get the borrower's intent-to-proceed with the transaction.
That makes sense, after all - these rules are written to encourage mortgage shopping, and it would certainly chill the borrower's ability to explore other options if she was charged for an appraisal every time she filled out an application.
Question: But Can We Order the Appraisal Sooner? (and charge them later?)
Yes. Yes, you can. You're taking a risk obviously - because if they don't give you intent-to-proceed later, you won't be able to recoup that fee. So, for that reason, this probably won't find its way into the standard operating procedures of most shops, but let's put that aside as sometimes exceptions need to be made.
That was the short answer. Here's the long answer (which you can look up in the official interpretations to 12 CFR 1026.19(e) under comment 5. "Fees").
Specifically the rule says that we cannot "impose" a fee on a borrower (except for a credit report fee) before getting intent-to-proceed. But what does it mean to impose a fee? Certainly, we cannot make them actually pay up-front. We also cannot require the borrower to provide a method of payment for a fee - EVEN IF we promise that no payment will be made until after receiving their intent-to-proceed.
Here are some examples straight from the rule book (albeit paraphrased, i.e., translated into plain English) of what is NOT allowed:
Bank requires borrower to give $450 check for the appraisal before getting intent-to-proceed. Bank promises not to cash check until after getting intent-to-proceed. Not allowed.
Lender requires borrower to give a credit card number prior to getting intent-to-proceed, even if the lender promises not to charge the credit card for the $450 for the appraisal until after getting intent-to proceed. Not allowed.
But don't sweat it! Here are a couple of things that we ARE allowed to do:
Bank requires borrower to provide credit card information to pay for credit report prior to getting intent-to-proceed. Bank is only authorized to use the credit card to pay the credit report. Note: This is still okay if the borrower later authorizes the Bank to use the same credit card to pay the appraisal. Permissible.
Lender orders appraisal before getting intent to proceed, in an attempt to speed up the process. After getting intent to proceed, the lender collects a check from the borrower to pay for the appraisal. Lender takes the risk of the borrower going somewhere else for a loan after the Lender orders the appraisal. Permissible.
In Other News
Interesting partnership down in Rhode Island with Lending Club and BankNewport ... innovative decision or short-sighted by the bank?
Want to see the graduation rate for every high school in the U.S. on a single map? (except Pennsylvania and Oklahoma) Well, here you go ...
"At what point did the banking industry forget that people have strong emotions about their money?" - Quote from an article arguing to put the "emotion [back] into [the] customer experience"
This is awful (and not a joke) - you saw the group of HSBC bankers who were fired after making a fake ISIS beheading video? Here's the story as posted on CNN.
Worried that you come off as arrogant? Maybe you actually are, in which case there's no need to read any more. But if you just come off that way, there are some things you can do about it. When working with others, remember to focus on the problem, not the person - you don't want to leave people around you feeling like they are themselves inferior. Don't make it personal. Some say arrogant people act to belittle others in order to prove that they are superior. (FYI. A Guide for Development and Coaching, Lombardo (2009), p.438). If you need people to recognize that you're amazing, just be amazing - don't try to put others down (the best employee in a terrible department is still probably a bad employee, one of the best employees in an amazing department is probably a pretty good employee). Finally, take time to listen to input from others, don't just assume you know it all (which is probably the definition of 'arrogant'). "Answers. Solutions. Conclusions. Statements. Dictates. That's the staple of arrogant people. Instant output. Sharp reactions. ... You jump to conclusions, categorically dismiss what others say, use challenging words in an absolute tone ... [Instead], ask a question, invite them to disagree with you, present their argument back to them softly, let them save face no matter what." (Id. at p. 437).
For more on issues like this you may be interested the book Social Intelligence: The new science of human relationships, Goleman (2007).
"It's much easier to be critical than to be correct ."
- Benjamin Disraeli
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