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Question 1 of 6

1. Question
A mortgage broker receives additional compensation for placing a borrower into a loan with a higher interest rate and requiring the borrower to purchase title insurance from an affiliated company.

Why could this compensation arrangement violate Regulation Z?
- A) Mortgage brokers may not offer affiliated services
- B) Regulation Z prohibits compensation based on transaction terms or conditions, including interest rates and required affiliated services
- C) Interest rate compensation is permitted only for FHA loans
- D) Title insurance may never be required in mortgage transactions
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Question 2 of 6

2. Question
A lender reduces a loan originator’s compensation to cover the cost of lowering the borrower’s interest rate during processing.

Why could this practice violate the final rule?
- A) Compensation may never be adjusted after application
- B) Compensation cannot be reduced to offset the cost of a change in transaction terms, known as a pricing concession
- C) Pricing concessions are prohibited only for adjustable-rate mortgages
- D) Loan originators are prohibited from discussing interest rate changes with borrowers
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Question 3 of 6

3. Question
A mortgage company pays loan originators higher bonuses based on the profitability of a pool of loans originated during the quarter.

Why could this compensation structure violate Regulation Z?
- A) Bonuses are prohibited for all mortgage loan originators
- B) Profitability standards apply only to commercial loans
- C) The final rule prohibits compensation based upon the profitability of a transaction or a pool of transactions
- D) Loan originators must always receive fixed hourly wages
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Question 4 of 6

4. Question
A mortgage lender contributes funds into a loan originator’s 401(k) retirement account as part of the company’s compensation program.

How is this arrangement generally treated under the final rule?
- A) It is prohibited because all compensation tied to mortgage activity is banned
- B) It is permitted because contributions to certain designated tax-advantaged retirement plans are allowed
- C) It is permitted only for commercial loan originators
- D) It is prohibited unless approved by the CFPB
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Question 5 of 6

5. Question
A mortgage company pays a non-deferred profits-based bonus to a loan originator who originated eight mortgage transactions during the previous 12 months.

Why could this compensation arrangement be permitted?
- A) Loan originators with fewer than ten mortgage transactions during the preceding 12 months may receive certain non-deferred profits-based bonuses
- B) Bonuses are allowed only for FHA-insured transactions
- C) Loan originators may receive unlimited profits-based bonuses regardless of production volume
- D) Bonuses are permitted only after five years of employment
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Question 6 of 6

6. Question
A mortgage company offers a non-deferred profits-based bonus plan where a loan originator’s annual bonus equals eight percent of the originator’s total compensation for the year.

Why could this compensation structure comply with the final rule?
- A) Profits-based bonuses are prohibited only for brokers
- B) Bonuses not exceeding ten percent of the individual loan originator’s total compensation are permitted
- C) Bonuses are allowed only if paid through retirement plans
- D) Compensation limits apply only to reverse mortgage originators
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