Which tolerance category applies to a fee retained by the lender, broker, or an affiliate of either?

The correct choice designates the tolerance category that applies to fees retained by the lender, broker, or an affiliate of either as zero tolerance. This means that the charges must remain exactly as disclosed on the Loan Estimate; there is no leeway for variation in these fees.

In the context of the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), zero tolerance applies to fees that are related directly to services for which the borrower is required to pay. Because fees that are categorized under this rule often involve those such as origination fees or points, it is critical that these amounts do not change by the time the borrower receives the Closing Disclosure.

Understanding this concept helps both borrowers and loan officers ensure transparency and trust in the borrowing process, as any discrepancies can lead to regulatory issues. The zero tolerance rule is designed to protect consumers from unexpected fee increases and provide clarity on the costs associated with their mortgage.