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Mortgage Application Fees Now Non-Refundable

Posted by: Chris Palmeri on August 3, 2009

I can remember being bombarded by mortgage refinancing offers from lenders during the boom. Many said they would waive their fees to get a deal.

Now, slowly, the solicitations are starting to trickle back. But now the fees are non-refundable. So if you apply for a refinancing and change your mind, you are out the application fee.

I recently got a solicitation from Chase offering a “0 point, $0 Chase fee loan at an aggressive rate.” Two sentences later it said: “There will be a $750 non-refundable application fee that is applied toward your appraisal at closing.” Hmm, $750 is more than an appraisal costs. What happened to that “0 Chase fee part?”

We recently considered doing a refinancing with Wells Fargo. They wanted a $500 non-refundable fee. There’s always pressure when you are refinancing to make a decision on the day you do your cost/benefit calculations, so the math won’t turn against you if interest rates move. That’s why the non-refundable part of this can be a problem for borrowers who change their minds.

Not every lender is doing this. Mitch Ohlbaum, a mortgage broker at Legend Mortgage in Los Angeles, tells me many lenders, such as Bank of America, are just asking for the appraisal fee up front but not an application fee.

Reader Comments

joyce a

August 3, 2009 5:46 PM

I applied for a B of A re-finance for about $110k a couple months ago & their application fee was $400 upfront, refundable only if I was turned down. I was told that appraisal fee would be extra.


August 4, 2009 10:53 AM

The rules have changed as of July 30, 2009. No broker or banker can take any funds from an applicant at application except for the cost of the credit report(s). They can only collect additional fees after three business days from the day the Good Faith Estimate and Truth in Lending is mailed.

Peter Eisenmann

August 4, 2009 1:11 PM

You are so right about the "trickle" of offers. It reminds me of all the credit card offers we used to get in the mail. Even for our kids who were 12 years old at the time.

We are finding in the Aiken, SC market that the offers are requiring non-refundable fees. The smaller banks that are doing in house mortgages are different but the mortgage lending companies are asking for this up front $. I guess that it does keep "tire kickers" from the door.

Pete @


August 7, 2009 5:26 PM

I called Chase and over the phone agreed to refinance, the next day I received the application and I decided against it when I saw the numbers on paper. I called the next day and told them I decided against refinancing and they WILL NOT refund my $750.00! I called within 3 days, nothing signed, no services were rendered, no appraisal, nothing and my credit card was billed immediately after I spoke to them the first time. No one will call me back from the company. How is this ethical. Is there any way I can obtain my money?


August 10, 2009 5:11 PM

We called Chase back in March 2009. We were asked a few questions about credit score, house valuation, financial information, then passed on to another person who told us we qualify for a 4+% interest rate and there would be a $750 application fee. The fee was immediately charged to our credit card. We supplied all requested information. Our interest rate expired July 24, 2009 with no call or letter from Chase. We started calling last week to seek a return phone calls until today. It seems our loan was declined due to debt/equity ratio. First of all, our loan is already with Chase, so I guess they are saying they shouldn't have loaned us money in the first place. And second, the loan we were trying to refinace was approximately $387,000. Our recent tax appraisal was $2.7 million dollars. The Chase appraisal was $2.4 million. What is wrong with this picture?

The public needs to be aware of these unethical practices and horrible service at Chase.


August 14, 2009 3:11 AM

Linda, the same thing happened to me at US Bank. I cancelled the next day, but the disclosure stated it was non- refundable. I went way up the ladder, but it didn't help (It was only $325, not $750)

Jason Raymond

January 11, 2010 2:53 PM

We contacted our current mortgage holder to refinance. We agreed to the terms listed in the GFE and paid our application fee by credit card. We signed nothing!! 2 days later we received a new GFE with the terms changed. Called them, they stated it was an error and it would be taken care of. Now, they are declining our loan unless we come up with an ungodly amount at closing and are refusing to refund our money. Even knowing we contacted them by phone and e-mail informing them to cancel everything initially when they were changing the terms. This doesn't sound right to me.


February 19, 2010 11:51 AM

We were not charged up-front, but the loan process was stopped within a week due to a problem with the seller. Now the lending insitution has contacted me about the fee. Thoughts?


February 19, 2010 11:58 AM

We applied for and were approved for a loan, but within a week of starting the process we cancelled everything because the seller could not transfer to us. Now the lender is asking for the loan application fee. Thoughts?

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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