An MLO is reviewing procedures for a case where a borrower asks which upfront charge can be collected before intent to proceed. What is the proper handling?
Correct Answer
C) Charge only a bona fide credit report fee before intent
Why this is correct: The TRID rule at 12 CFR 1026.19(e)(2)(i) explicitly states that, except for a bona fide and reasonable credit report fee, a creditor cannot require any payment from a consumer before the consumer has received a Loan Estimate and indicated intent to proceed. Therefore, the proper handling is to "Charge only a bona fide credit report fee before intent". Why the other choices are wrong: "Wait until closing to disclose a known lender-required fee" is wrong because lender-required fees are zero-tolerance charges that must be disclosed in good faith on the initial Loan Estimate; delaying disclosure until closing is a violation. "Use the lowest advertised provider quote after a different provider has been selected" is wrong because this is a rule for estimating a fee on the Loan Estimate when the consumer selects a provider not on the written list, not a rule about collecting payments upfront. "Apply the income calculation timing rule even though the file is testing Permitted fees before intent to proceed" is wrong because applying an unrelated rule (like one for income calculation timing) to a question about permissible upfront fees is incorrect and does not address the legal requirement. Exam tip: Isolate the issue: if the question is about collecting money *before* intent, the answer is always the credit report fee exception.
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: 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 B: 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.
Option D: Apply the income calculation timing rule even though the file is testing Permitted fees before intent to proceed.
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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