What is the maximum percentage of the loan amount that the lender's fee charged to the Knightleys may not exceed?

In the context of mortgage loans, particularly in Minnesota, lenders are often subjected to regulatory caps on the fees they can charge for originating a loan. The maximum percentage of the loan amount that a lender can charge as a fee is typically established to protect consumers from excessive costs. In this case, the correct answer is 5%.

This percentage reflects regulatory guidance aimed at ensuring that lending remains fair and accessible. Keeping fees within this limit helps borrowers like the Knightleys understand the cost of obtaining a loan and aids in financial planning. It’s important for loan originators to be aware of these limits to ensure compliance with state laws and maintain ethical lending practices.

The other options present higher fee caps, which do not align with the established regulations, indicating that they are not permissible limits for lender fees. Understanding this regulatory landscape is critical for anyone working in the mortgage industry, as it directly impacts both compliance and consumer protection.