CMA - Certified Mortgage Advisor Advisor Ethics and Communication Questions and Answers 1

Question 1

A client is struggling to meet the income requirements for a loan. They tell their Certified Mortgage Advisor (CMA) that they plan to temporarily deposit a large sum of money from a personal loan into their bank account and have a relative sign a gift letter stating it does not need to be repaid. What is the CMA's most ethical and legally sound response?

Accepted Answer

Advise the client that misrepresenting the source of funds constitutes mortgage fraud and refuse to proceed with the application in that manner.

Answer

A CMA's primary ethical and legal duty is to prevent fraud. Knowingly submitting an application with misrepresented information is a serious crime for all parties involved. The only correct action is to advise the client of the illegal nature of their proposal and refuse to participate.

Question 2

The ethical framework for a Certified Mortgage Advisor is built on a primary commitment to act in the client's best interest, placing their needs above the advisor's own. This principle is best described as:

Accepted Answer

A fiduciary responsibility

Answer

A fiduciary responsibility legally and ethically requires an individual to act in the best financial interest of another party. This is the core expectation for a CMA, distinguishing them from a purely transactional loan officer and requiring them to prioritize the client's well-being over their own potential compensation.

Question 3

Which of the following marketing communication arrangements between a mortgage advisor and a real estate agent is MOST likely to violate RESPA Section 8?

Accepted Answer

The advisor paying the real estate agent a monthly fee to be featured as the 'exclusive preferred lender' on the agent's website.

Answer

RESPA Section 8 prohibits giving or receiving a 'thing of value' for the referral of settlement service business. Paying an ongoing fee for an 'exclusive preferred' status is viewed as a payment for the expectation of referrals, which is a violation. The other options are generally permissible as they are either tied to fair market value for advertising or are considered normal promotional activities not tied to specific referrals.

Question 4

A loan application is denied by underwriting due to the applicant's high debt-to-income ratio. When communicating this to the applicant, what is the most appropriate and ethical action for the Certified Mortgage Advisor to take?

Accepted Answer

Clearly explain the reason for the denial and inform them they will receive a formal Adverse Action Notice with specific details and their rights.

Answer

Ethical communication requires transparency and honesty. Furthermore, the Equal Credit Opportunity Act (ECOA) mandates that applicants receive a specific reason for an adverse action. The advisor should professionally communicate the reason and set the correct expectation for the official Adverse Action Notice, which will provide further details.

Question 5

A Certified Mortgage Advisor creates a social media post that prominently features the phrase "30-year fixed rates as low as 5.25%!" To comply with the Truth in Lending Act (TILA), what other information must the advertisement also clearly and conspicuously state?

Accepted Answer

The Annual Percentage Rate (APR) and other triggered loan terms.

Answer

Under TILA (Regulation Z), stating a specific interest rate is a 'triggering term.' Once a trigger term is used, the advertisement must also disclose additional information so the consumer can understand the full cost of credit. This includes the Annual Percentage Rate (APR), the amount or percentage of the down payment, and the terms of repayment.

(CMA) Certified Mortgage Advisor Practice Test

(CMA) Certified Mortgage Advisor Practice Test

CMA - Certified Mortgage Advisor Advisor Ethics and Communication Questions and Answers 1