Am I obligated to pay this appraisal fee?

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I contacted a mortgage broker I have used before about doing a cash out re-finance on my home combining the 1st and 2nd mortgage and getting some cash. He gave me all the details and sent over a good faith estimate and I provided all of the information in order to proceed. I later find out I cannot do a re-finance because our house is currently for sale. Therefore, I opt to go with a HELOC to refinance the existing 2nd mortgage. He quoted me a rate of prime and said it appears we are below 80% LTV and should have some additional equity to borrow against if we would like. The appraisal came back at $ 359K…far lower than the $ 398K appraisal I have done a few month earlier (that he would not accept) in order to remove my PMI. Coincidentally, the $ 359K put us right at 80% LTV and he proceeded to tell me the rate is no longer prime…it is now a 5% floor rate. I told him I was not interested…since I knew I could get a better deal (and I did with another bank). When I told him I was not interested and stated the appraisal seems way off…he said I still owe for the appraisal. Am I still obligated to pay this? Given my situation it seems like they purposely tried to get my appraisal to come in where I would not be under 80% LTV. From the recent sales in my area I know the $ 359K is low. Regardless, I was not happy with the entire process and was not informed of anything until after the appraisal. If he would have told me that it did not look like we would be under 80% LTV then he should have said so…instead of SURPRISE…you are not getting prime…the best we can do is a 5% floor. Another thing I should mention, I did not sign a Good Faith Estimate for the HELOC application…since I was originally applying for conventional loan. I only signed a Good Faith for the conventional loan.
What exactly did I sign that obligates me to pay?

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3 Comments
  1. Reply
    Steve D
    May 4, 2011 at 3:53 am

    Yes, you are obligated. The fact that you disagree with the terms and the appraisal is of no relevance. You started the process and without your okay, the appraisal never would have been performed. And he could not have told you whether you would have been under the 80% until the appraisal was completed.

  2. Reply
    Tom B
    May 4, 2011 at 4:10 am

    Technically, you had a service performed. Someone came out to your home and performed an appraisal. Regardless of the outcome of the appraisal, doesn’t change the fact that the service was performed. But, if you didn’t pay for it, I would assume the broker will be forced to pay the appraiser. The appraiser is not working for free.

  3. Reply
    Real Estate Guy
    May 4, 2011 at 4:48 am

    yes you are, as the first poster states.

    The lender ordered the apprasial on your behalf. You owe the money

    I’m surprised at how many times lenders don’t get the appraisal fee up front.

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