Predatory lending practice?

[jwynn]

I'm trying to find out if the following qualifies as predatory lending practice.

I recently filed an application to refinance my home. My intention was to consolidate a first and second mortgage, and to take some equity out as cash to pay off some bills. There is roughly $160K between the first and second mortgage, so my application was to refinance a mortgage of $180K. The bank automatically accepted the application and conditionally approved the loan within 24 hours of my filing the application. I was later told that they would underwrite the loan for a full $180K only if the appraised value of the home exceeded $250K.

I told them no thanks. My home is not on the market, and I have no idea what its appraised value would be.

In order to submit the application online, I had to agree to pay an interest rate lock-in fee of 0.50% of the approved loan application. They now intend to bill me for $900 even though they did not approve the loan for the principal amount that was requested. I'm no lawyer but from my perspective there was no good faith agreement because the bank did not disclose the conditions under which they would approve the mortgage for the full amount, and therefore their conditional approval is no approval at all.

So... What do you think? Do I have any legal recourse?What is the name of your state (only U.S. law)?

[HUD-1]

Your loan application was not approved, they did not lock in your rate, so how is it that they are charging you a lock in fee? Soemthing doesn't sound right...

[FlyingRon]

Doesn't sound like a lock-in fee, but an application fee (and a hefty one).
And the "appraisal" has nothing to do with your house being on the market. You can understand the banks interest in maintaining LTV. Only in the height of lenders insanity would anybody not demand an appraisal as part of the process.