Mortgage Loan Originator (MLO) Licensing Practice Test

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Prepare for the Mortgage Loan Originator (MLO) Licensing Test. Study with flashcards and multiple-choice questions, each with hints and explanations. Get ready to succeed on your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

When can a borrower be charged fees besides the credit reporting fee?

Immediately after application
After loan approval
After receiving disclosures
Before receiving any disclosures

The correct answer is: After receiving disclosures

The correct choice is related to the timing of when a borrower can be charged fees other than the credit reporting fee. According to federal regulations, specifically the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), borrowers can be charged fees such as underwriting fees, application fees, or processing fees only after they have received the required loan disclosures. These disclosures are intended to inform the borrower about the terms of the loan, the costs involved, and their rights, creating transparency in the mortgage lending process. Charging fees prior to the receipt of disclosures can lead to misunderstandings and potential violations of consumer protection laws, as borrowers may not be fully aware of what they are committing to financially. Therefore, the requirement to provide disclosures first protects borrowers and ensures they have all the necessary information before incurring any additional costs aside from the credit report fee, which is typically exempt from this rule.