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A compliance review finds that a manager proposes higher pay for loans with a higher interest rate. What should the MLO do next?

Correct Answer

D) Keep compensation independent of loan terms or proxies

Lines 55-63; 12 CFR 1026.36(d)(1). Compensation cannot be structured around transaction terms or proxies for those terms. Therefore, the correct response is "Keep compensation independent of loan terms or proxies".

Answer Options
A
Let the borrower and creditor both pay the MLO on the same transaction.
B
Use profitability of the selected product to decide the originator bonus.
C
Change MLO pay after the lock because the borrower chose discount points.
D
Keep compensation independent of loan terms or proxies

Why This Is the Correct Answer

Lines 55-63; 12 CFR 1026.36(d)(1). Compensation cannot be structured around transaction terms or proxies for those terms. Therefore, the correct response is "Keep compensation independent of loan terms or proxies".

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