What is the term for the practice described as guiding borrowers toward particular loan products to increase compensation for the originator?

• A. Steering
• B. Nondisclosure
• C. Coercion
• D. Redlining

Answer: (A)

Steering is the term for guiding borrowers toward particular loan products to increase compensation for the originator. This practice happens when a loan officer recommends or pushes a loan type mainly because it yields higher commissions or fees for the originator, not because it’s the best option for the borrower. It undermines the borrower’s interests and can violate consumer protection and fair-lending laws, since the recommendation is driven by incentives rather than suitability.

Nondisclosure, coercion, and redlining describe different improper behaviors. Nondisclosure is failing to reveal important terms or costs, coercion is using pressure or threats to get a borrower to accept a loan, and redlining is denying or avoiding lending in certain geographic areas.