Ethics · 18% of the SAFE exameasy
Correct answer: An MLO receiving compensation from both the lender and the borrower on the same transaction
The LO Compensation Rule (Regulation Z, 12 CFR 1026.36) expressly prohibits dual compensation — that is, an MLO being paid by both the lender and the borrower on the same transaction. This rule prevents MLOs from steering borrowers into unfavorable loans for personal financial gain. A flat fee per loan, commission based on loan size, and salary-plus-bonus structures can all be permissible as long as they don't create impermissible steering incentives and are not dual-source payments on the same loan.
CRAM ARCADE has the full NMLS question bank, timed practice exams, focus drills on your weakest category, flashcards and spaced repetition. No credit card.
Start studying free