In a mortgage origination file, a borrower asks which upfront charge can be collected before intent to proceed. Which action should be taken?
Correct Answer
B) Charge only a bona fide credit report fee before intent
Why this is correct: The governing provision, 12 CFR 1026.19(e)(2)(i), creates a bright-line rule: no fees can be collected prior to the consumer receiving a Loan Estimate and indicating intent to proceed, with the singular exception of a bona fide and reasonable credit report fee. Thus, the action that should be taken is "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 renaming does not address the underlying tolerance violation; proper cures involve refunding the excess or, for some 10% tolerance fees, documenting a valid reason for the increase. "Treat the Permitted fees before intent to proceed review as complete because the file contains a related quality-control note" is wrong because a quality-control note does not substitute for actual compliance with the fee collection rule; the review must verify the correct fee was (or was not) collected. "Increase a zero-tolerance charge because the borrower accepted the cost verbally" is wrong because zero-tolerance charges (like lender fees) cannot be increased at all unless a limited set of changed circumstances applies; borrower verbal acceptance is not a valid reason. Exam tip: The credit report fee exception is narrow; it must be bona fide (actual) and reasonable in amount.
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 C: Treat the Permitted fees before intent to proceed review as complete because the file contains a related quality-control note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option D: 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.
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.
More Origination Questions
Before the team acts on a servicing handoff check, a closing coordinator must address Asset Verification and Reserves. Which response is most defensible?
An MLO is reviewing procedures for a case where a cost changes after the Closing Disclosure has already been provided. What is the proper handling?
During a post-application update, a quality-control reviewer encounters a Credit Analysis and Evaluation issue. Which response should avoid a shortcut that would misapply the rule?
A construction-to-permanent loan will disburse in 5 draws over 11 months before the permanent phase begins. Which Regulation Z appendix provides a disclosure method for multiple-advance construction transactions?
Before closing, the team discovers that a borrower asks which upfront charge can be collected before intent to proceed. What is the safest compliant answer?
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A branch manager asks about a loan file because a processor wants to omit known monthly obligations from underwriting. What should happen?
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