Federal Mortgage LawsQuestion 56 of 400
Under the Loan Originator Compensation Rule, a loan originator's compensation may NOT be based on which of the following?
a.The total dollar amount of credit extended
b.The interest rate of the loan
c.A fixed hourly wage
d.The number of loans closed over a year at a flat per-loan amount
Explanation
Reg Z 1026.36 prohibits compensating a loan originator based on a term of a transaction, and the interest rate is a loan term. Compensation may be based on the loan amount (as a fixed percentage), hourly pay, or a flat amount per loan. Basing pay on the rate would incentivize steering borrowers into costlier loans.
Law Reference: Loan Originator Compensation Rule (Reg Z 1026.36)Practice all 400 questions free — no signup required.
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