A California file asks which charges count in the 6% covered-loan points-and-fees test. What should the reviewer use?
Correct Answer
B) Include finance charges, broker compensation, and covered Regulation Z charges, while excluding qualifying bona fide third-party charges.
California points and fees for 6% covered-loan analysis include finance charges, broker compensation, and certain Regulation Z charges, but exclude specified bona fide third-party charges such as appraisal fees when statutory conditions are met; example amounts such as $25, $400, $2,000, and $100,000 are arithmetic fact-pattern amounts rather than separate statutory triggers.
Why This Is the Correct Answer
The correct response is "Include finance charges, broker compensation, and covered Regulation Z charges, while excluding qualifying bona fide third-party charges." because California points and fees for 6% covered-loan analysis include finance charges, broker compensation, and certain Regulation Z charges, but exclude specified bona fide third-party charges such as appraisal fees when statutory conditions are met; example amounts such as $25, $400, $2,000, and $100,000 are arithmetic fact-pattern amounts rather than separate statutory triggers.
Why the Other Options Are Wrong
Option A: Count only origination points and disregard broker compensation.
Count only origination points and disregard broker compensation. is not correct because it does not match the state-specific rule tested by the question.
Option C: Exclude all appraisal fees even if the statutory conditions are not met.
Exclude all appraisal fees even if the statutory conditions are not met. is not correct because it does not match the state-specific rule tested by the question.
Option D: Use the borrower cash-to-close total instead of the points-and-fees categories.
Use the borrower cash-to-close total instead of the points-and-fees categories. is not correct because it does not match the state-specific rule tested by the question.
Memory Technique
State rule questions: identify the state, isolate the condition, then eliminate answers that overgeneralize the rule.
Exam Tip
On state-law items, look for the answer that applies the state-specific condition instead of a broad licensing shortcut.
Common Mistakes to Avoid
- -Choosing an answer that sounds generally compliant but omits the state-specific condition
- -Treating experience, company licensing, or borrower consent as a substitute for the state rule
- -Missing limiting words such as only, generally, eligible, or statutory
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