Before a consumer receives the Loan Estimate and indicates an intent to proceed, which fee may a creditor generally charge for a covered mortgage application?
Correct Answer
A) A bona fide and reasonable credit-report fee
Why this is correct: Under TRID's "fee restriction" rule, a creditor is very limited in what fees it can collect from a consumer before issuing the Loan Estimate and before the consumer indicates an intent to proceed with the application. As the original explanation states, the only fee generally permitted at this early stage is a bona fide (legitimate) and reasonable fee for obtaining the consumer's credit report. This allows the creditor to assess creditworthiness without imposing significant upfront costs on the consumer. Why the other choices are wrong: "An appraisal fee" is wrong because this is a substantial third-party service fee that cannot be charged until after the LE is provided and the consumer indicates intent to proceed. "An underwriting fee" is wrong because this is a lender fee for processing the loan, which is also restricted until after the consumer has received the LE and indicated intent to proceed. "A rate-lock fee" is wrong because this fee is associated with securing an interest rate, which typically occurs later in the process, after the initial disclosures and often after the consumer has decided to move forward. Exam tip: Before LE + intent to proceed, the only chargeable fee is for the credit report. All other application-related fees come later.
Why This Is the Correct Answer
Why this is correct: Under TRID's "fee restriction" rule, a creditor is very limited in what fees it can collect from a consumer before issuing the Loan Estimate and before the consumer indicates an intent to proceed with the application. As the original explanation states, the only fee generally permitted at this early stage is a bona fide (legitimate) and reasonable fee for obtaining the consumer's credit report. This allows the creditor to assess creditworthiness without imposing significant upfront costs on the consumer. Why the other choices are wrong: "An appraisal fee" is wrong because this is a substantial third-party service fee that cannot be charged until after the LE is provided and the consumer indicates intent to proceed. "An underwriting fee" is wrong because this is a lender fee for processing the loan, which is also restricted until after the consumer has received the LE and indicated intent to proceed. "A rate-lock fee" is wrong because this fee is associated with securing an interest rate, which typically occurs later in the process, after the initial disclosures and often after the consumer has decided to move forward. Exam tip: Before LE + intent to proceed, the only chargeable fee is for the credit report. All other application-related fees come later.
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