What does a Loan Originator Compensation Plan outline?

A Loan Originator Compensation Plan specifically outlines the structure and terms under which Mortgage Loan Originators (MLOs) will be compensated for their work in originating loans. This plan includes various components such as the basis for compensation, whether it is a salary, commission, or a combination of both, and any performance metrics or incentives associated with the originating process.

Understanding this aspect is crucial because it affects how MLOs operate and motivates them to close loans. Properly structured compensation plans ensure compliance with regulations, particularly the Truth in Lending Act (TILA) and the Dodd-Frank Act, which aim to protect consumers and promote fair lending practices.

The other options do not fit because they refer to unrelated concepts. The types of loans available in the market, a list of approved lenders, and the responsibilities of the borrower during the loan process do not directly address how MLOs receive compensation for their services in originating loans.