Which items are classified as ZERO tolerance items?

Zero tolerance items are specific charges that cannot change at closing from the amounts listed on the Loan Estimate, with few exceptions. These typically encompass costs that the lender controls directly or are required to be paid to a specific third party in order for the loan to close.

The correct classification of zero tolerance items includes appraisal fees, origination fees, lender fees, and transfer taxes. Appraisals are essential and often mandated by lenders, meaning the cost should remain consistent. The origination fee, which is a fee charged for processing the loan, also falls under this category since it's paid directly to the lender and is typically set at the time of the loan estimate. Lender fees can vary, but when specified in the loan estimate, they must adhere to the no change policy. Transfer taxes, which are fees associated with the transfer of property ownership, often also incur a zero tolerance limit.

In contrast, the other choices include items that are not classified as zero tolerance. For example, inspection fees and processing fees may fluctuate based on market conditions or specific situations. Ultimately, understanding which fees fall under this category is crucial for compliance with the regulations that protect borrowers from unexpected costs at closing.