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Category: Finance
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Experience:  Tax professional and business consultant for 35 years.
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If a private loan company asks for a loan origination fee

Customer Question

If a private loan company asks for a loan origination fee and says that they are able to fund a loan and lied do they owe the loan origination fee back.
I received a term sheet with the request for loan origination fee request stating that they were going to fund my loan. what happens if they did not have the funds at all and were not able to loan I am in Oregon they are in Utah
Submitted: 8 months ago.
Category: Finance
Expert:  PDtax replied 8 months ago.

Hi from Just Answer. I'mCustomer and can assist.

Expert:  PDtax replied 8 months ago.

The answer is state law dependent, and the best answer I can give is it depends.

Some application fees are just that, and are nonrefundable.

Others. called loan origination fees, are likely dependent on completing the loan transaction. They are typically withheld from the loan proceeds.

Your agreement will typically spell out what the fee is for, and under what circumstances it is refundable.

I want to look at state law to see if there might be clarity. One moment, please...

Expert:  PDtax replied 8 months ago.

The origination fee is allowed to be nonrefundable in Utah, but it could be refundable. It depends on your loan agreement.

You might also have rights in your state which protect you and might allow you to pursue a remedy.

Thanks for asking at just Answer. Positive feedback is appreciated to rate my assistance. I'mCustomer