An applicant asks to lock a rate on the phone. The loan estimate has not been delivered and the lender wants a $500 processing deposit up front. Before the consumer receives the Loan Estimate and indicates intent to proceed, which fee, if any, may be imposed?
Correct Answer
A) A bona fide, reasonable fee for obtaining the consumer’s credit report
A. The limited credit-report-fee exception may apply. A processing deposit is not converted into a credit-report charge by calling it an upfront payment. A rate-lock request or email cannot replace the missing Loan Estimate receipt condition. Scope and exceptions: This concerns the pre-Loan Estimate fee restriction for covered transactions, not every fee rule applicable to every loan. Source: 1026.19(e)(2)(i)(A)–(B) — https://www.consumerfinance.gov/rules-policy/regulations/1026/19/
Why This Is the Correct Answer
A. The limited credit-report-fee exception may apply. A processing deposit is not converted into a credit-report charge by calling it an upfront payment. A rate-lock request or email cannot replace the missing Loan Estimate receipt condition. Scope and exceptions: This concerns the pre-Loan Estimate fee restriction for covered transactions, not every fee rule applicable to every loan.
Why the Other Options Are Wrong
Option B: The full $500 may be collected, as the applicant asked to proceed
The requested $500 processing deposit is not within that exception.
Option C: Nothing may be collected until the applicant has signed at the closing
Closing signatures are not the trigger tested here.
Option D: The $500 may be collected once the applicant confirms by email
An email does not resolve the missing disclosure receipt.
Exam Tip
Check the fee’s actual purpose and the disclosure stage.
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