A borrower-facing employee is unsure what to do when a borrower asks which upfront charge can be collected before intent to proceed. What is the correct response?
Correct Answer
A) Charge only a bona fide credit report fee before intent
Why this is correct: The legal standard from 12 CFR 1026.19(e)(2)(i) is unambiguous: except for a bona fide and reasonable credit report fee, a creditor cannot collect any charge from a consumer before the consumer receives a Loan Estimate and indicates intent to proceed. Therefore, the correct response is "Charge only a bona fide credit report fee before intent". Why the other choices are wrong: "Leave the Loan Estimate unchanged after the creditor learns the disclosed charge is inaccurate" is wrong because if a creditor learns of information making a Loan Estimate inaccurate before closing, Regulation Z may require issuing a revised Loan Estimate; failing to update it violates the rule of providing estimates in good faith. "Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance" is wrong because simply renaming a fee does not cure a tolerance violation; proper cures require a refund to the consumer or specific documentation for certain increases. "Move the fee to a different category to avoid a tolerance cure" is wrong because fee categorization is based on the nature of the charge; moving it to avoid a cure is deceptive and violates tolerance and good faith requirements. Exam tip: For fee collection timing, the rule is binary: credit report fee yes, everything else no.
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 B: Leave the Loan Estimate unchanged after the creditor learns the disclosed charge is inaccurate.
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: 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 D: 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.
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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