Loan Officer Practice Exam

What type of fees is a mortgage broker typically prohibited from collecting from a client?

1. Rate lock-in fees

2. Processing fees

3. Application fees

4. Funding fees

The correct answer is: Rate lock-in fees

Mortgage brokers are typically prohibited from collecting rate lock-in fees from clients because these fees are often considered to be part of the lender's responsibilities rather than the broker's. A rate lock-in fee is a charge that secures a specific interest rate for a certain period. This practice is generally more associated with lenders, who have the authority to ensure that the borrower can secure a specific rate based on their loan product. In contrast, processing fees, application fees, and funding fees are generally allowable charges that a mortgage broker can collect. Processing fees are charged for the administrative work required to process a loan. Application fees are collected for the initial assessment and processing of a borrower's application. Funding fees pertain to the costs associated with disbursing funds for the loan. Thus, these types of fees align with standard practices within the industry for mortgage brokers.