What type of fees cover the costs associated with issuing a loan?

The correct choice highlights origination points as the type of fees that cover costs associated with issuing a loan. Origination points are fees paid to the lender by the borrower at closing for processing the loan application. These fees essentially represent the lender's service charge for underwriting and preparing the mortgage.

When a borrower takes out a loan, there are various costs involved in creating and managing that loan, and these costs are typically covered by origination points. They can be a percentage of the loan amount, directly reflecting the lender's compensation for the work involved in facilitating the loan.

Other fee types serve different purposes. Processing fees, for example, are charged for the administrative work that goes into processing a loan application but do not encompass the broader scope of costs that origination points cover. Discount points are prepaid interest used to lower the overall interest rate on the loan, which is unrelated to covering the costs of issuing the loan itself. Late fees are penalties imposed for late payment and do not factor into the loan issuance process.