Licensees are prohibited from doing which of the following in relation to escrow funds?

The correct answer highlights an important aspect of ethical practices in the mortgage industry. Licensees are prohibited from accepting fees from loan applicants prior to closing because doing so can create a conflict of interest and potentially lead to misleading situations regarding the loan process. This rule is in place to protect consumers from being charged for services that may not be rendered or for costs that are not clearly disclosed prior to formal agreements being made.

In the context of escrow funds, it is essential that all handling of these funds is transparent and conducted ethically to maintain trust in the mortgage process. The prohibition against upfront fees ensures that licensees do not take advantage of applicants before they have formally committed to a loan or before due diligence has been carried out.

The other choices do not accurately reflect prohibitions on licensees. For example, maintaining an escrow account at a federally-insured depository institution is standard practice, providing security for the funds. Similarly, providing statements for escrow accounts is a responsibility of licensees to keep parties informed and ensure accountability. Transferring escrow funds is typically permissible as long as consent has been obtained, emphasizing the importance of communication and transparency between the parties involved.