During intake, a borrower asks which upfront charge can be collected before intent to proceed. What is the best compliant response?
Correct Answer
C) Charge only a bona fide credit report fee before intent
Why this is correct: The rule under 12 CFR 1026.19(e)(2)(i) creates a very limited exception: before providing the Loan Estimate and before the borrower indicates intent to proceed, the lender may collect only a bona fide and reasonable fee for obtaining a credit report. No other fees are permitted at this stage. Why the other choices are wrong: "Move the fee to a different category to avoid a tolerance cure" is wrong because re-categorizing a fee to circumvent tolerance rules (like moving a zero-tolerance fee to a different category) is a deceptive practice and violates the spirit and letter of the rule. "Increase a zero-tolerance charge because the borrower accepted the cost verbally" is wrong because zero-tolerance fees cannot be increased at all, and verbal acceptance does not override this strict prohibition. "Wait until closing to disclose a known lender-required fee" is wrong because known lender-required fees must be disclosed in good faith on the Loan Estimate; delaying disclosure until closing would violate the disclosure timing rules. Exam tip: Before intent to proceed, the only fee you can collect is for a credit report. Remember: "Credit report only until intent."
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: 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 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 D: 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.
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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