What is the ONLY charge a lender can make prior to the loan estimate?

The correct choice is the credit report fee, which is the only charge a lender is permitted to impose prior to providing the loan estimate. This regulation is set forth by the Consumer Financial Protection Bureau (CFPB) under the Truth in Lending Act and the Real Estate Settlement Procedures Act (RESPA) guidelines.

The reasoning behind allowing only the credit report fee before the loan estimate is to ensure transparency and consumer protection. The loan estimate is designed to provide borrowers with a clear understanding of the terms of the loan and the associated costs, which means that lenders should not collect additional fees until the borrower has viewed this essential document. The credit report fee is necessary for the lender to assess the creditworthiness of the borrower, but it is regulated under specific conditions to ensure borrowers are not surprised by unexpected costs.

Other fees, such as application fees, title search fees, and processing fees, typically require disclosures in the loan estimate and should only be charged after the borrower has received and reviewed that document. This helps protect consumers by ensuring they are informed about all potential costs before they commit to a loan.