A CFL broker wants to collect a $95 application fee, a $400 rate-lock fee and an $18 credit report fee before a residential loan closes. How should the broker determine whether each proposed preclosing charge is permitted?
Correct Answer
A) Check each against the allowed categories: preclosing charges are restricted
The Financing Law restricts what may be charged before closing on a residential mortgage to named categories such as actual third-party costs, application fees, rate-lock fees and commitment fees, subject to the statutory conditions, so each is tested rather than assumed. Other choices: agreement does not enlarge the categories; charges before closing are not banned outright; and third-party costs are one category rather than the only one. Source: Cal. Fin. Code § 22313
Why This Is the Correct Answer
The Financing Law restricts what may be charged before closing on a residential mortgage to named categories such as actual third-party costs, application fees, rate-lock fees and commitment fees, subject to the statutory conditions, so each is tested rather than assumed. Other choices: agreement does not enlarge the categories; charges before closing are not banned outright; and third-party costs are one category rather than the only one. Source: Cal. Fin. Code § 22313
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