What is considered a prohibited fee?

A prohibited fee in the context of mortgage compliance typically pertains to fees that consumers are charged without proper justification or without adhering to the regulations set forth under applicable laws, such as the Truth in Lending Act or the Real Estate Settlement Procedures Act.

In this scenario, the account closing fee stands out because it may be deemed excessive or not aligned with the services provided when a consumer closes an account. Unlike the other options, which are fees linked to specific actions the consumer has taken—such as making a late payment, overdrawing an account, or having a payment returned—the account closing fee could be considered as not directly related to a service that warrants an extra charge, potentially making it a prohibited fee.

This option reflects the regulatory focus on ensuring that fees must be reasonable and customary for the services rendered, and if they do not meet that standard, they may be classified as prohibited—a concept that aligns with the overarching goals of consumer protection laws.