Which of the following would be considered a violation of Dodd-Frank MLO compensation rules?
Correct Answer
B) Paying an MLO higher commission for portfolio loans versus loans sold to investors
Paying different compensation based on whether loans are portfolio or sold to investors constitutes compensation based on loan terms or characteristics. This creates incentives to steer borrowers to particular loan types, which is prohibited under Dodd-Frank.
Why This Is the Correct Answer
Paying different compensation based on whether loans are portfolio or sold to investors constitutes compensation based on loan terms or characteristics. This creates incentives to steer borrowers to particular loan types, which is prohibited under Dodd-Frank.
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