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Question 1 of 7

1. Question
A loan originator receives compensation based on a fixed percentage of the amount of credit extended on each mortgage transaction.

Under Regulation Z, when is this compensation structure generally permitted?
- A) Only when approved by the CFPB
- B) Loan originators may receive compensation based on a fixed percentage of the amount of credit extended, subject to minimum or maximum dollar limits
- C) Compensation may only be based on interest rates
- D) Fixed-percentage compensation is prohibited for all residential mortgage loans
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Question 2 of 7

2. Question
A loan originator receives direct compensation from a borrower and also accepts additional compensation from a creditor involved in the same transaction.

Why could this arrangement violate Regulation Z?
- A) Loan originators may only receive compensation from real estate brokers
- B) Loan originators receiving compensation directly from a consumer cannot receive compensation from any other person
- C) Dual compensation is required on FHA loans
- D) Compensation restrictions apply only to mortgage brokers
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Question 3 of 7

3. Question
A creditor knows that a borrower directly compensated the loan originator for a mortgage transaction. Despite this, the creditor also pays compensation to the same loan originator for the transaction.

Why could this practice violate Regulation Z?
- A) Creditors may never compensate loan originators
- B) No person who knows of consumer-paid compensation to the loan originator may also pay compensation to that loan originator
- C) Compensation restrictions apply only to commercial mortgage transactions
- D) Consumer-paid compensation is prohibited under federal law
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Question 4 of 7

4. Question
During a regulatory audit, a lender is asked to produce records showing compensation paid to a loan originator and the compensation agreement in effect when the interest rate was set.

Why must these records be maintained?
- A) Regulation Z requires creditors to maintain records of loan originator compensation and applicable compensation agreements
- B) Compensation records are required only for FHA-insured loans
- C) Recordkeeping applies only to commercial transactions
- D) Compensation agreements are not required if commissions are fixed
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Question 5 of 7

5. Question
A borrower agrees to pay upfront discount points and lender fees at closing on a residential mortgage loan.

How does Regulation Z generally treat this practice?
- A) Creditors are prohibited from collecting upfront points and fees
- B) Upfront points and fees are permitted because there is no prohibition on creditors collecting them
- C) Upfront fees are allowed only on adjustable-rate mortgages
- D) Borrowers may pay fees only after consummation
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Question 6 of 7

6. Question
A loan originator recommends a mortgage loan primarily because the creditor will pay the originator higher compensation than other available loan options.

Why could this conduct violate federal steering rules?
- A) Loan originators may never recommend fixed-rate mortgages
- B) Loan originators cannot steer consumers to transactions based on greater compensation unless the transaction is in the consumer’s interest
- C) Steering restrictions apply only to FHA-insured loans
- D) Compensation differences between creditors are prohibited
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Question 7 of 7

7. Question
A borrower expresses interest in a specific type of mortgage transaction. The loan originator presents loan options from several creditors with whom the originator regularly conducts business.

Why is this generally required under steering rules?
- A) Loan originators must present loan options from a significant number of creditors for each type of transaction in which the consumer expressed interest
- B) Borrowers may only select loans from affiliated creditors
- C) Steering rules prohibit offering multiple loan choices
- D) Loan originators may present options from only one creditor at a time
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