Question

For which of the following is the creditor permitted to charge more than it discloses in the Loan Estimate (i.e., there is no tolerance limitation) and still meet the good faith requirement?

a: Brokerage fees
b: Transfer taxes
c: Prepaid interest
d: Recording Fees

Answer 1

Prepaid interest is the charge for which creditors are allowed to charge more than disclosed on the Loan Estimate while still meeting good faith requirements. Other fees like brokerage fees, transfer taxes, and recording fees have tolerance limitations.

Step-by-step explanation:

Among the options provided, the one for which the creditor is permitted to charge more than it discloses in the Loan Estimate without tolerance limitations and still meet the good faith requirement is prepaid interest. This is because prepaid interest is considered a variable cost that can change depending on the exact day the loan is closed. The Loan Estimate provides an estimate based on the best information available at the time of estimate, but the actual amount of prepaid interest can change if there is a change in the closing date. Other charges such as brokerage fees, transfer taxes, and recording fees are subject to tolerance limitations, meaning the creditor must disclose these fees accurately within limited margins of error to comply with regulations.