Advertising Free Appraisals

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Question:

Our mortgage department wants to run an ad stating "Free Appraisal for purchase loans closed between Jan 1 and June 30, 2010. Valued up to $400 for any home purchase." Is this considered a triggering term? I tend to believe it is, since the rule says "the amount of any finance charge", but I'm just not 100% sure. Any thoughts?

Answer:

An appraisal fee on a mortgage loan is not a finance charge. What happens if the appraisal costs $450? Does the customer have to pay $50? If so, the use of "Free Appraisal" would most likely be "unfair and deceptive".

First published on BankersOnline.com 1/11/10