A broker contract says a $2,400 fee is earned for best efforts even if no loan is ever obtained for the borrower. May a borrower contract make this best-efforts fee earned when no loan is obtained?
Correct Answer
D) Prohibited: a fee may not be earned on best efforts with no loan
A person may not solicit or enter into a contract with a borrower providing in substance that a fee or commission may be earned through best efforts to obtain a loan even though no loan was actually obtained. Other choices: initialling the clause is what the prohibition is aimed at; a refund on withdrawal leaves the clause in place for every other outcome; and the quality of the effort is not the test. Source: Tex. Fin. Code sec. 180.153(4)
Why This Is the Correct Answer
A person may not solicit or enter into a contract with a borrower providing in substance that a fee or commission may be earned through best efforts to obtain a loan even though no loan was actually obtained. Other choices: initialling the clause is what the prohibition is aimed at; a refund on withdrawal leaves the clause in place for every other outcome; and the quality of the effort is not the test. Source: Tex. Fin. Code sec. 180.153(4)
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