A processor asks how to handle a file where a borrower asks which upfront charge can be collected before intent to proceed. Which response is most accurate?
Correct Answer
A) Charge only a bona fide credit report fee before intent
Why this is correct: The rule, as cited from 12 CFR 1026.19(e)(2)(i), explicitly prohibits collecting any charge before the consumer receives a Loan Estimate and indicates intent to proceed, with one narrow exception. That exception is for a bona fide and reasonable fee for obtaining the consumer's credit report. Thus, the most accurate response is "Charge only a bona fide credit report fee before intent". Why the other choices are wrong: "Increase a zero-tolerance charge because the borrower accepted the cost verbally" is wrong because a zero-tolerance charge (e.g., a lender fee) cannot be increased for any reason, including borrower verbal acceptance, without a valid changed circumstance. "Wait until closing to disclose a known lender-required fee" is wrong because known lender fees must be disclosed on the initial Loan Estimate, not deferred to closing. "Use the lowest advertised provider quote after a different provider has been selected" is wrong because this describes a rule for estimating charges when a provider is not selected, which is irrelevant to the question about collecting fees *before* intent. Exam tip: For questions on permissible upfront fees, immediately recall the credit report fee exception; all other fees are prohibited until after the Loan Estimate is provided and intent to proceed is indicated.
Why This Is the Correct Answer
The correct response is "Charge only a bona fide credit report fee before intent" because Lines 186-203; 12 CFR 1026.19(e)(2)(i).
Why the Other Options Are Wrong
Option B: Increase a zero-tolerance charge because the borrower accepted the cost verbally.
This choice is a tempting shortcut, but it conflicts with fee disclosure and tolerance treatment because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option C: Wait until closing to disclose a known lender-required fee.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Option D: Use the lowest advertised provider quote after a different provider has been selected.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Memory Technique
Permitted fees before intent to proceed: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For fee disclosure and tolerance treatment questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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