I don't hear any lender telling the appraisers to do this; i.e., we'll only pay you for an appraisal if the loan closes. (Tried that once in the moldy oldy days and it generated a small problem - appraisers ALWAYS came up spot on with the value the lender wanted; hence, licensing, education, regulations, etc. for appraisers.)
Of course, state insurance regulations and in this case where the abstract is tied to the issuance of an insurance policy are different. On the other hand, the title abstract will tell the lender in advance what liens and encumbrances are on the real property securing the loan; i.e., not everything shows up on a credit report and it often is "too late to collect" by the time the preliminary title insurance binder is submitted to the lender.
It's a shame I don't hear: The lender will pay $xxx as a fixed fee for every abstract, which will be collected from the borrower at application and paid from lender to the abstractor on presentation of the abstract to the (whatever - lender, title insurance company). IF the cost of copies exceeds this fee, the balance will be paid at closing as a separate line item out-of-pocket reimbursement on the HUD settlement statement. It is not a perfect deal, but at least every abstractor should get paid something for work performed. The out-of-pocket expense also isn't borne by the hiring entity's pocket, it's borne by the borrower ... or the lender or mortgage broker that was foolish enough not to collect the appraisal, credit report and abstract costs up front.
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