A mortgage company offers MLOs a bonus system where they receive an extra $200 for each loan that closes within 21 days of application. This compensation arrangement is:
Correct Answer
C) Permitted as it's based on performance metrics
This compensation is based on processing efficiency and performance metrics, not loan terms. Dodd-Frank permits compensation based on factors other than loan terms, including performance-based incentives that don't relate to the cost or terms of the loan itself.
Why This Is the Correct Answer
This compensation is based on processing efficiency and performance metrics, not loan terms. Dodd-Frank permits compensation based on factors other than loan terms, including performance-based incentives that don't relate to the cost or terms of the loan itself.
More Origination Questions
A borrower has a construction-to-permanent loan with a 12-month construction phase. At month 10, construction is only 60% complete due to delays. What is the most likely outcome?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
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A borrower's credit score drops from 740 to 690 between application and underwriting due to a new credit inquiry. The lender wants to increase the interest rate by 0.375%. Under TRID, this scenario constitutes:
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A borrower calls an MLO asking about current interest rates for a 30-year fixed mortgage. The MLO quotes a rate but the borrower doesn't provide any financial information. What disclosure requirement applies to this communication?