Which of the following is a pay structure change introduced by the Dodd-Frank Act for MLOs?

• A. Changed pay structure for mortgage loan originators
• B. Eliminated all commissions for MLOs
• C. Reduced minimum wages for MLOs
• D. Required that MLOs be employees of banks only

Answer: (A)

The important idea here is how the Dodd-Frank Act changed how mortgage loan originators are paid to reduce conflicts of interest and steering. The act introduced rules that limit incentive-based pay tied to the terms of a loan. In practice, this means MLOs can’t be compensated in a way that rewards higher interest rates or less favorable loan terms. Instead, their pay should come from allowed structures such as a salary, hourly wage, or a fixed amount, or be based on non-transactional factors or overall production that isn’t tied to a loan’s terms. It also discouraged or prohibited payments like yield-spread premiums to brokers because those created incentives to steer borrowers toward specific terms.

So, the change is about adjusting the pay structure for MLOs to remove incentives tied to loan terms, not about eliminating commissions, cutting wages, or restricting MLO employment to banks only.