An MLO receives compensation of $2,000 per loan plus an additional $300 if the borrower chooses to lock their rate for 60 days instead of 30 days. This compensation structure:
Correct Answer
C) Is prohibited because it's based on a loan term
The rate lock period is considered a loan term, and compensation that varies based on any loan term is prohibited under Dodd-Frank, regardless of whether it's the borrower's choice or whether it's disclosed. The prohibition applies to all loan terms and conditions.
Why This Is the Correct Answer
The rate lock period is considered a loan term, and compensation that varies based on any loan term is prohibited under Dodd-Frank, regardless of whether it's the borrower's choice or whether it's disclosed. The prohibition applies to all loan terms and conditions.
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Previous Question
An MLO receives a base salary plus a year-end bonus calculated as 0.1% of the total dollar volume of loans that successfully close without any post-closing compliance issues. Six months later, if a loan develops compliance problems, the MLO must return a proportional amount of the bonus. This arrangement:
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