What is the maximum fee a lender or broker can charge a borrower on a mortgage loan with a principal amount less than $300,000?

The correct answer regarding the maximum fee a lender or broker can charge a borrower on a mortgage loan with a principal amount less than $300,000 is 1% of the loan amount. This limitation is put in place to protect consumers from excessive fees and ensure that the costs associated with obtaining a mortgage are reasonable.

The rationale behind this regulation is to promote affordability and accessibility in the mortgage market, particularly for loans under $300,000, which typically cater to first-time homebuyers or lower-income borrowers who may be more sensitive to high upfront costs. By capping the fee at 1%, the regulation helps to prevent lenders and brokers from imposing disproportionate charges that could hinder borrowers' ability to secure financing for their homes.

Therefore, understanding this cap is crucial for both borrowers, who should be aware of their rights and potential costs, and for mortgage professionals, who must adhere to these regulations in their lending practices.