Federal Mortgage LawsQuestion 25 of 400
Under Regulation Z's loan originator compensation rule, a loan originator's compensation generally may NOT be based on:
a.The total dollar volume of loans originated over a year
b.A fixed percentage of the loan amount consistently applied
c.The terms of the transaction, such as the interest rate
d.Whether the loan is a purchase or a refinance, if applied without steering
Explanation
Regulation Z prohibits basing loan originator compensation on the terms of a transaction, such as the interest rate, to prevent steering borrowers into costlier loans. Compensation may be based on the loan amount or overall volume, and certain permissible factors are allowed. Rate-based or term-based pay is the prohibited practice this rule targets.
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