A servicer of a high-cost mortgage wants to charge $30 for a payoff statement requested by the borrower, and a $75 fee for modifying the loan. Assuming this is an ordinary first payoff-statement request without an applicable fee exception, which of the two proposed fees is restricted under the high-cost mortgage rules?
Correct Answer
D) Both proposed fees are prohibited under the stated facts
D. Both fees are prohibited in this scenario. Section 1026.34(a)(7) prohibits charging to modify a high-cost mortgage. Section 1026.34(a)(9) generally prohibits payoff-statement fees. The question expressly excludes the exceptions. Scope and exceptions: Payoff statements are not universally fee-free: limited fax/courier processing charges and reasonable fees after four qualifying statements in a calendar year can apply under the regulation’s conditions. These exceptions do not authorize the proposed modification fee. Source: Section 1026.34(a)(7) and (a)(9)(i)–(iv) — https://www.consumerfinance.gov/rules-policy/regulations/1026/34/
Why This Is the Correct Answer
D. Both fees are prohibited in this scenario. Section 1026.34(a)(7) prohibits charging to modify a high-cost mortgage. Section 1026.34(a)(9) generally prohibits payoff-statement fees. The question expressly excludes the exceptions. Scope and exceptions: Payoff statements are not universally fee-free: limited fax/courier processing charges and reasonable fees after four qualifying statements in a calendar year can apply under the regulation’s conditions. These exceptions do not authorize the proposed modification fee.
Why the Other Options Are Wrong
Option A: Both are permitted, as servicing fees sit outside the high-cost restrictions
The restrictions extend to the specified servicing conduct.
Option B: Only the payoff-statement fee is prohibited; the modification fee is permitted
It overlooks the modification-fee prohibition.
Option C: Only the modification fee is prohibited; the payoff-statement fee is permitted
It overlooks the ordinary payoff-statement fee prohibition.
Exam Tip
Apply each high-cost servicing prohibition and check its own exceptions.
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