A mortgage loan originator receives a base salary of $50,000 plus a commission of 0.5% of the loan amount for each loan closed. Additionally, the lender offers a bonus of $500 for loans with interest rates above 6%. Which part of this compensation structure violates Dodd-Frank?
Correct Answer
C) The bonus tied to interest rate
The bonus tied to interest rate violates Dodd-Frank's prohibition on compensation based on loan terms. While salary and commission based on loan amount are permitted, any compensation tied to interest rate or other loan terms is prohibited under Section 1403.
Why This Is the Correct Answer
The bonus tied to interest rate violates Dodd-Frank's prohibition on compensation based on loan terms. While salary and commission based on loan amount are permitted, any compensation tied to interest rate or other loan terms is prohibited under Section 1403.
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