Which scenario represents a permissible compensation arrangement under Dodd-Frank?
Correct Answer
C) MLO receives $1,500 for loans under $200,000 and $2,000 for loans over $200,000
Compensation based on loan amount is permitted under Dodd-Frank. However, compensation that varies based on loan type, term, or interest rate is prohibited as it constitutes compensation based on loan terms rather than loan amount.
Why This Is the Correct Answer
Compensation based on loan amount is permitted under Dodd-Frank. However, compensation that varies based on loan type, term, or interest rate is prohibited as it constitutes compensation based on loan terms rather than loan amount.
More Origination Questions
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?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
During a refinance transaction, the appraiser determines that significant unpermitted additions were made to the property. The appraiser wants to discuss this with the MLO before finalizing the report. What should the MLO do?
An appraiser discovers that a property has significant foundation issues that were not disclosed. The appraiser reduces the property value by $25,000 and includes detailed comments about the structural problems. The loan officer is upset because this will kill the deal. Under AIR, the loan officer:
An MLO's compensation structure includes higher payments for certain loan products. When is it acceptable to recommend these higher-compensated products?
People Also Study
Federal Mortgage-Related Laws
23% of exam
General Mortgage Knowledge
23% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Previous Question
Under Dodd-Frank, a mortgage lender is prohibited from paying an MLO compensation that is based on:
Next Question
During a rate lock period, market rates increase by 0.75%. The borrower asks to switch from a 30-year fixed to a 15-year fixed loan with the same lender while keeping the locked rate. What is the most appropriate response?