What must a lender provide to a borrower regarding fees and charges?

• A. A written disclosure of fees and charges
• B. A detailed brochure on loan terms
• C. A verbal explanation in person
• D. A copy of previous loan agreements

Answer: (A)

A lender is required to provide a written disclosure of fees and charges to the borrower as part of ensuring transparency and compliance with legal standards in mortgage lending. This disclosure typically includes details about all costs associated with the loan, such as origination fees, processing fees, and any other charges that may be incurred during the loan process.

The written disclosure serves to protect the borrower by clearly outlining what they will be responsible for financially, allowing them to make informed decisions regarding their loan options. Moreover, regulatory bodies, including the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), mandate these disclosures to promote fairness and clarity in lending practices.

While detailed brochures on loan terms, verbal explanations, or previous loan agreements may provide some information, they do not fulfill the legal requirement to disclose all fees and charges in writing before closing a loan. This written documentation is essential for borrowers to fully understand the costs involved and helps prevent any misunderstandings or disputes later in the process.