What fee may a lender charge before the applicant receives the Loan Estimate (LE)?

The fee that a lender is permitted to charge before the applicant receives the Loan Estimate (LE) is a reasonable fee for a credit report. This is because Regulation Z allows for certain fees to be collected prior to the delivery of the Loan Estimate, primarily to cover costs associated with obtaining information necessary to process the loan application.

A reasonable fee for a credit report is essential for lenders to assess the creditworthiness of the applicant. This fee is considered necessary for the lender to evaluate risk before formally proceeding with the loan details that will be outlined in the Loan Estimate.

Other fees, like those for appraisals or notary services, generally cannot be charged until after the applicant has received the Loan Estimate. This regulation is intended to protect consumers from incurring costs without being fully informed of their loan terms and fees upfront. Thus, while certain initial costs can be incurred, they must fall within the allowed parameters set by Regulation Z concerning the Loan Estimate process.