A quality-control reviewer flags a case because a borrower asks which upfront charge can be collected before intent to proceed. What correction is appropriate?
Correct Answer
D) Charge only a bona fide credit report fee before intent
Why this is correct: The correct standard is found in 12 CFR 1026.19(e)(2)(i). It permits only one specific fee to be collected before the consumer receives a Loan Estimate and indicates intent to proceed: a bona fide and reasonable fee for obtaining the consumer's credit report. Thus, the appropriate correction is to ensure the practice aligns with "Charge only a bona fide credit report fee before intent". Why the other choices are wrong: "Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance" is wrong because mislabeling a fee does not cure a tolerance violation; the cure must involve a refund to the consumer or proper documentation for permissible increases. "Move the fee to a different category to avoid a tolerance cure" is wrong because fees must be categorized correctly based on their nature; moving them to avoid a cure is manipulative and non-compliant. "Resolve the Permitted fees before intent to proceed issue with the income calculation exception that does not fit the facts" is wrong because applying an exception from a different rule (like income calculation) to a fee-collection issue is irrelevant and does not correct the underlying violation. Exam tip: In quality-control contexts, any fee collected before intent that is not a credit report fee is a clear violation requiring correction.
Why This Is the Correct Answer
The correct response is "Charge only a bona fide credit report fee before intent". The narrow fee exception is for a bona fide and reasonable credit report fee before Loan Estimate receipt and intent to proceed.
Why the Other Options Are Wrong
Option A: Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance.
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 B: Move the fee to a different category to avoid a tolerance cure.
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 C: Resolve the Permitted fees before intent to proceed issue with the income calculation exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
Before intent to proceed, think credit report only.
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
- -A common trap is treating all third-party fees as collectible before intent.
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