Loan Officer Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

In the context of the Closing Disclosure, a lender categorizes settlement charges based on how the borrower selects their service providers. When the borrower chooses a service from a predetermined written list provided by the lender, those fees are appropriately categorized in Section B of the Closing Disclosure. This section is specifically designated for fees to the borrower’s selected providers that the lender has approved. This classification helps maintain transparency regarding the costs involved in the closing process and ensures borrowers understand which fees are associated with the services they have specifically chosen from the lender's list.

Other categorization processes exist for different situations, such as when a lender's default provider is selected, which would place those fees in a different section, but for solutions from a written list, Section B is the accurate classification. Additionally, while the fees may not always transfer directly to the Closing Disclosure as they appear on the Loan Estimate, the rules regarding selection and listing provide a framework for understanding where those charges will ultimately be placed in the Closing Disclosure, reinforcing the importance of borrower choice in the service provider selection process.