West Virginia Mortgage Law Practice Test

A licensee is permitted to:

1. Collect a fee that is not disclosed to the borrower

2. Collect duplicate fees or points

3. Collect a legitimate application fee

4. Collect a fee larger than disclosed in the agreement

The correct answer is: Collect a fee that is not disclosed to the borrower

The correct answer is that a licensee is permitted to collect a legitimate application fee. This fee represents a reasonable charge that compensates the lender for processing the borrower's application and typically covers costs associated with underwriting, credit checks, and other preliminary assessments. In the context of mortgage law, it is critical for fees to be transparent and disclosed to the borrower upfront. This aligns with the principles of fairness and transparency that govern lending practices, ensuring that borrowers are well-informed about the costs associated with their loan. Collecting an application fee that is clearly disclosed adheres to these standards and maintains the integrity of the lending process. The other options involve practices that could lead to ethical or legal challenges, as they would not provide the necessary transparency that protects consumers in transaction settings.