Question

Broker Burns is negotiating a first trust deed loan for buyers. The buyers have signed a contract for a fifteen year loan. What is the maximum commission for Broker Burns?

1. Five percent of the principal of the loan.
2. Ten percent of the principal of the loan.
3. Fifteen percent of the principal of the loan.
4. Two percent of the principal of the loan.

Answer 1

The answer is 2. Ten percent of the principal of the loan

Step-by-step explanation:

By law, maximum commissions for first trust deed loans are at :

- 5% of the principal for loans less than 2 years or less than 3 years

- 10% of the principal for loans 3years and more.

Second trust deed loans, on the other hand, are stated at 5% for loans up to 2years, 10% for loans between 2-3 years and 15% for loans more than 3 years.