Housing Counselor Certification (HUD) Practice Exam

Which charge cannot change from the Loan Estimate to the Closing Disclosure?

1. Closing costs

2. Fees paid to lender

3. Prepaid taxes

4. Homeowner's insurance

The correct answer is: Fees paid to lender

The correct answer is that fees paid to the lender cannot change from the Loan Estimate to the Closing Disclosure. This consistency is required by the rules set forth by the Consumer Financial Protection Bureau (CFPB) under the Truth in Lending Act and the Real Estate Settlement Procedures Act (TRID). These regulations aim to provide borrowers with a clear understanding of the costs involved in a mortgage transaction, enhancing transparency. Lender fees are considered "qualified" fees, which means they must remain the same on both documents as they are essential for the consumer’s understanding of their financial commitment. By locking these fees in, the regulations protect consumers from unexpected increases that might occur during the closing process. Other charges, such as closing costs overall, prepaid taxes, and homeowner's insurance, are not subject to the same strict rules and can vary between the Loan Estimate and the Closing Disclosure. These are often influenced by final calculations, changes in the transaction, or the exact timing of the closing, which may affect amounts owed at closing. This flexibility ensures that both documents accurately reflect the final transaction specifics as they evolve through the home buying process.