- 9 -
date of petitioner’s offer. Form 6 would set forth details of
the specific mortgage that an originator could deliver.
Between 1985 and 1991, petitioner required an originator to
submit a 2-percent commitment fee with the executed prior
approval purchase contract. During the years at issue, the 2-
percent commitment fee consisted of a 0.5-percent nonrefundable
portion and a 1.5-percent portion that was refundable if an
originator delivered the mortgage under the prior approval
purchase contract.5 Petitioner was entitled to keep the
nonrefundable portion when it entered into the agreement. The
0.5-percent portion of the commitment fee received by petitioner
was not held in trust or escrow and was subject to unfettered
control by petitioner.
If an originator did not deliver the specific mortgage to
petitioner, it forfeited the 1.5-percent refundable portion of
the commitment fee. Forfeiture of the refundable portion of the
fee in the event of nondelivery functioned as a delivery
5 In 1982, petitioner charged a commitment fee equal to 2
percent of the commitment amount (the principal amount of the
mortgage to be delivered), which was fully refunded to a mortgage
originator if the mortgage was delivered. In September 1983, the
commitment fee was changed so that the amount charged to a
mortgage originator was still 2 percent, with 1 percent being
nonrefundable and 1 percent refundable when the mortgage loan was
delivered. The commitment fee structure was changed again for
the years in issue.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011