The maximum commission a loan broker may charge to negotiate an $8,000 hard money first trust deed that is due in two years is:
Question & Answer
Review the question and all answer choices
$400.
$400 would be incorrect because it's less than both the calculated commission ($325) and the minimum required commission ($1,000) for loans under $20,000 in California.
$500.
$500 would be incorrect because it falls below the mandatory minimum commission of $1,000 for hard money loans under $20,000 in California.
$1,000.
$1,
$1, (likely $1,000) would be correct according to California law, but appears to be cut off in the option. The complete option would be the correct answer.
Why is this correct?
California law mandates a minimum commission of $1,000 for hard money loans under $20,000. Although the calculated commission using the standard rate (5% of first $5,000 plus 2.5% of remainder) would be $325, this minimum provision applies, making $1,000 the maximum allowable commission.
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