Which document must a licensee provide before collecting fees from a loan applicant?

Before a licensee can collect fees from a loan applicant, it is essential to provide a good faith estimate. This document outlines the estimated costs associated with the loan, including fees and other charges that the borrower may incur. Essentially, the good faith estimate is a way to ensure transparency and give borrowers a clear understanding of their financial obligations before they commit to the loan process.

Providing this estimate helps borrowers make informed decisions about whether to proceed with the loan application. It establishes trust and ensures that applicants are not caught off guard by unexpected fees down the line. This practice is regulated to protect consumers and encourages ethical conduct within the mortgage lending industry.

The other options, while related to the mortgage process, do not fulfill the specific requirement of informing the borrower about fees prior to collection. A loan agreement formalizes the terms of the loan after approval, a disclosure statement may cover various aspects of the loan but is typically not tied to fee collection, and a credit report is a tool used to evaluate a borrower’s creditworthiness rather than a means of disclosing costs.