An MLO's compensation plan includes a base salary plus a bonus based on the loan volume originated in a quarter. The bonus structure pays 0.25% of loan volume for the first $5 million, 0.30% for the next $5 million, and 0.35% for volume above $10 million. This compensation structure is:
Correct Answer
B) Permitted because it's based on loan volume, not loan terms
Under Dodd-Frank Section 1403, MLO compensation may be based on the number or volume of loans originated, but cannot be based on the terms of individual loans or pools of loans. Volume-based compensation with tiered rates is permitted as long as it doesn't vary based on loan terms.
Why This Is the Correct Answer
Under Dodd-Frank Section 1403, MLO compensation may be based on the number or volume of loans originated, but cannot be based on the terms of individual loans or pools of loans. Volume-based compensation with tiered rates is permitted as long as it doesn't vary based on loan terms.
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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?