What fees are permissible according to mortgage regulations?

The correct answer identifies that permissible fees are those that borrowers pay to obtain a loan and are disclosed on the Loan Estimate (LE). Under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), lenders are required to provide borrowers with a clear and detailed breakdown of all fees associated with obtaining a mortgage. The Loan Estimate is a vital tool that helps ensure transparency and allows borrowers to compare different loan offers effectively.

When all fees are disclosed on the LE, it promotes fairness in the lending process and protects consumers from hidden costs. This practice is essential for ensuring that borrowers make informed decisions based on a clear understanding of their financial commitments.

The other options do not align with mortgage regulations. Fees not disclosed to the borrower do not meet regulatory requirements, as disclosure is a fundamental aspect of the process. Fees tied exclusively to late payments are typically not part of the upfront costs of obtaining a mortgage and therefore are not included in the LE. Additionally, while origination and processing fees may be included, limiting permissible fees strictly to these would ignore the variety of other fees that can also be disclosed and collected in association with the loan, such as underwriting and appraisal fees.