Dual Compensation MLO 2026: When You Can Take Both Lender and Borrower Fees

The dual compensation prohibition in the MLO Compensation Rule is frequently misunderstood. The rule does not prohibit all fees on both sides of a transaction. It prohibits the same originator from receiving lender-paid and borrower-paid compensation on the same loan.

What Dual Compensation Actually Prohibits

On a single loan, the MLO cannot receive both a fee from the borrower (origination points or processing fees payable to the originator) and separate compensation from the lender. The combination of both sources for the same originator on the same loan is the violation. This applies regardless of whether both fees are fully disclosed on the Closing Disclosure.

Lender-Paid vs. Borrower-Paid Plans

• ✦In a lender-paid compensation plan, the originator receives all compensation from the lender; no origination fees are charged to the borrower by the originator.
• ✦In a borrower-paid plan, the originator is paid by the borrower through discount points or origination fees; the lender pays no separate compensation.
• ✦An originator cannot switch plans transaction-by-transaction; the compensation structure must be consistent and documented.

Common Confusion Points

• ✦Lenders can charge the borrower an origination fee on lender-paid plans because the fee goes to the lender entity, not the individual originator.
• ✦Processing fees paid to a third-party processor are not MLO compensation.
• ✦Desk fees or overhead charges paid by the originator to the lender are not compensation going to the originator.
• ✦The prohibition applies to the individual MLO, not the company as a whole.