Under California Financial Code section 4970, which charge is generally excluded from the 6% points-and-fees calculation when it is bona fide and not retained by the lender or broker?
Correct Answer
A) A bona fide third-party appraisal fee
California points and fees exclude specified bona fide third-party charges such as appraisal fees when the statutory conditions are met.
Why This Is the Correct Answer
California points and fees exclude specified bona fide third-party charges such as appraisal fees when the statutory conditions are met.
Why the Other Options Are Wrong
Option B: Origination fee retained by the lender
Origination fees are included in the 6% points and fees calculation as lender compensation.
Option C: Broker compensation
Broker compensation is a primary component of the points and fees calculation.
Option D: Discount points retained as creditor compensation
Discount points are included in the points and fees calculation.
Memory Technique
CA -> ca-covered-loans-high-cost-consumer-protections
Exam Tip
Covered-loan questions often test the 8-point APR trigger, 6 percent points-and-fees trigger, principal-dwelling scope, Consumer Caution notice timing, ATR, prepayment penalty limits, prohibited loan terms, and remedies.
Common Mistakes to Avoid
- -Using a national baseline answer when California has agency-specific DFPI or DRE requirements
- -Confusing CFL, CRMLA, covered-loan, usury, servicing, and DRE endorsement rules
- -Relying on legacy California state-exam or education assumptions instead of current NMLS source pages
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