Which activity is permitted for a licensed mortgage loan originator?

The option indicating that a licensed mortgage loan originator is permitted to collect compensation after completion of services is correct because it aligns with standard practices within the mortgage industry. Mortgage loan originators are typically compensated for their work after they have successfully assisted clients in obtaining a mortgage loan. This ensures that clients receive the necessary services, including loan processing and underwriting, before any fees are charged.

Collecting compensation after the completion of services can also enhance trust between the client and the originator, as clients can feel more secure knowing that they are paying for tangible results. In addition, it complies with regulations that often seek to prevent upfront fees that can lead to predatory practices or abuse of the loan process.

In contrast, other options can raise concerns about compliance with regulations. Charging upfront fees may lead to charges that can be seen as predatory or unjustified if the services are not delivered. Requiring extensive documentation for pre-approval could also be problematic depending on the specific requirements set by regulations and could deter potential borrowers. Finally, limiting lending activity to only established clients restricts the originator's ability to expand their client base and does not align with the fair lending practices designed to offer opportunities to a wider range of borrowers.