A compliance review finds that a borrower asks which upfront charge can be collected before intent to proceed. What should the MLO do next?
Correct Answer
D) Charge only a bona fide credit report fee before intent
Why this is correct: The governing rule under 12 CFR 1026.19(e)(2)(i) (TILA-RESPA Integrated Disclosure rule) is that a creditor cannot require any payment, impose any fee, or collect any charge from a consumer before the consumer has received a Loan Estimate and indicated intent to proceed, except for one specific fee. The sole permissible upfront charge is a bona fide and reasonable fee for obtaining a consumer's credit report. Therefore, "Charge only a bona fide credit report fee before intent" is the correct action. Why the other choices are wrong: "Wait until closing to disclose a known lender-required fee" is wrong because lender-required fees must be disclosed in good faith on the Loan Estimate after intent to proceed, not hidden until closing. "Use the lowest advertised provider quote after a different provider has been selected" is wrong because it misapplies the rule for quoting provider fees; the question is about what can be collected *before* intent, not about quoting. "Treat a changed provider fee as unlimited solely because it is paid to a third party" is wrong because a changed provider fee is not automatically unlimited; it's subject to tolerance rules, and this statement distracts from the core rule about permissible pre-intent fees. Exam tip: Remember the single, narrow exception: only a bona fide credit report fee can be collected before the consumer receives the Loan Estimate and indicates intent to proceed.
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 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 C: Treat a changed provider fee as unlimited solely because it is paid to a third party.
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.
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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