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Ethics and Professional Standards in Mortgage Banking Flashcards

7 cards from real CMB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Ethics and Professional Standards in Mortgage Banking flashcards as text

  1. A CMB professional who receives confidential client financial information must NOT:

    Answer: Disclose it to third parties for marketing or personal gain

    Using confidential client information for unauthorized marketing or personal gain violates both GLBA privacy requirements and fundamental professional ethics obligations.

  2. Under NMLS licensing requirements, a mortgage loan originator must complete how many hours of continuing education annually to maintain licensure?

    Answer: 8 hours

    The SAFE Act requires licensed MLOs to complete a minimum of 8 hours of NMLS-approved continuing education annually, covering federal law, ethics, lending standards, and electives.

  3. Which of the following scenarios most clearly represents a violation of the MBA's ethical principles regarding competence?

    Answer: An MLO originates a jumbo adjustable-rate mortgage without understanding its terms and pricing

    Originating a product the MLO does not understand violates the professional duty of competence, potentially harming the borrower through unsuitable product placement or inaccurate disclosures.

  4. A mortgage banker's duty to maintain confidentiality of borrower information continues:

    Answer: Indefinitely, even after the business relationship ends

    Professional and legal confidentiality obligations survive the end of the client relationship; former clients retain privacy rights over nonpublic personal information shared during the engagement.

  5. Under Regulation B (ECOA), a creditor who requests information about a spouse or former spouse NOT applying for joint credit is doing so improperly UNLESS:

    Answer: The applicant lives in a community property state and the income is relied upon

    Reg B permits spousal information requests when the applicant relies on community property income or assets and the property is in a community property state, which affects the lender's rights.

  6. Which of the following best defines 'predatory lending' in the context of mortgage banking ethics?

    Answer: Imposing abusive terms and exploiting borrowers through deceptive or coercive practices for the lender's gain

    Predatory lending is characterized by deceptive, coercive, or exploitative practices — such as equity stripping, loan flipping, or packing — that benefit the lender at the borrower's expense.

  7. A CMB professional who suspects a colleague of mortgage fraud is ethically required to:

    Answer: Report the suspected fraud through appropriate internal or regulatory channels

    Professional ethics and SAR (Suspicious Activity Report) obligations under the Bank Secrecy Act require reporting suspected mortgage fraud through proper compliance or regulatory channels without tipping off the suspect.