Loan Officer Practice Exam

Where should lenders record charges such as processing fees and rate-lock fees in the Closing Disclosure?

1. Origination Charges

2. Services Borrower Did Not Shop For

3. Other Costs

4. Escrow Account Details

The correct answer is: Origination Charges

Lenders should record charges such as processing fees and rate-lock fees in the section for Origination Charges on the Closing Disclosure. This section is specifically designated for fees that are charged directly by the lender for the processing, handling, and origination of the loan. Origination charges typically include points to lower the interest rate, as well as various fees that are necessary to evaluate and close the loan, reflecting the cost of obtaining the mortgage. Other sections, such as Services Borrower Did Not Shop For, are intended for third-party services that the borrower did not select, while the Other Costs category encompasses miscellaneous fees not covered elsewhere. The Escrow Account Details section focuses on funds required for property taxes and homeowners insurance, rather than upfront or one-time fees charged by the lender during the closing process. Thus, the inclusion of processing and rate-lock fees in Origination Charges aligns with the intent and structure of the Closing Disclosure, making this the appropriate choice.