What is the tolerance for a fee that the borrower must pay but is not allowed to select the service provider, such as the appraisal fee?

The tolerance for a fee that borrowers must pay, for which they do not have the ability to select the service provider, is set at zero. This means that the borrower is not allowed to incur any increase in the fee that was originally disclosed on the Loan Estimate. Since these fees can significantly impact the total cost of the loan, the regulation aims to protect borrowers from unexpected charges arising from service providers they do not choose, such as appraisers.

In the context of the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), the zero tolerance rule applies to certain items, ensuring that if the borrower is not allowed to choose a provider, the fees cannot exceed the amount disclosed in the Loan Estimate. This rule is crucial for maintaining transparency and trust within the mortgage industry, as it assures borrowers that they will not face unexpected costs for services they have no control over.

The other answer choices reflect different interpretations of fee tolerances related to borrower-selected services or differently regulated fees, but specifically for those fees where the borrower cannot choose the provider, the correct tolerance is zero.