A mortgage company's compensation plan pays MLOs different commission rates based on the geographic region where the property is located, with higher rates for loans in rural areas where processing is more complex. The commission rate does not vary based on any loan terms. This geographic-based compensation:
Correct Answer
C) Is permitted because it's based on operational complexity, not loan terms
Geographic-based compensation that reflects legitimate business costs or operational complexity is permitted under Dodd-Frank, as long as the variation is not tied to loan terms but rather to the cost or difficulty of providing services in different areas.
Why This Is the Correct Answer
Geographic-based compensation that reflects legitimate business costs or operational complexity is permitted under Dodd-Frank, as long as the variation is not tied to loan terms but rather to the cost or difficulty of providing services in different areas.
More Origination Questions
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A Loan Estimate discloses a $1,500 appraisal fee in the 'Services You Can Shop For' section, but provides no list of service providers. At closing, the borrower used the lender's appraiser and was charged $1,650. What tolerance category applies?
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A borrower qualifies for conventional, FHA, and non-QM loans. The MLO presents one option from each category but all have significantly different loan amounts ($400k conventional, $350k FHA, $450k non-QM). This presentation: