CMB Ethics and Professional Standards in Mortgage Banking

Question 1

Under the MBA's Code of Ethics, a CMB-certified professional must disclose which of the following to clients at the point of application?

Accepted Answer

All material fees, terms, and the nature of the lender's compensation

Answer

The lender's preferred title company

Answer

The borrower's credit score and internal risk tier

Answer

The projected secondary market sale price of the loan

Question 2

Which federal law most directly prohibits mortgage professionals from engaging in discriminatory lending practices based on race, color, religion, sex, or national origin?

Accepted Answer

Fair Housing Act (FHA)

Answer

Truth in Lending Act (TILA)

Answer

Real Estate Settlement Procedures Act (RESPA)

Answer

Home Mortgage Disclosure Act (HMDA)

Question 3

A mortgage banker who steers a qualified borrower toward a subprime loan when the borrower qualifies for a prime product is engaging in which prohibited practice?

Accepted Answer

Reverse redlining

Answer

Redlining

Answer

Blockbusting

Answer

Churning

Question 4

Under MBA professional ethics guidelines, a mortgage banker who discovers a potential conflict of interest with a client should FIRST:

Accepted Answer

Disclose the conflict to all relevant parties and obtain informed consent

Answer

Withdraw from the transaction immediately

Answer

Refer the client to a competitor

Answer

Notify the state regulator before proceeding

Question 5

Which of the following best describes the concept of 'fiduciary duty' as it applies to mortgage bankers acting as brokers?

Accepted Answer

A legal duty to act in the best financial interest of the client above one's own interests

Answer

An obligation to maximize the lender's profit on every transaction

Answer

A requirement to report all transactions to HUD

Answer

A contractual obligation to use only approved appraisers

Question 6

The Home Mortgage Disclosure Act (HMDA) requires lenders to collect and report loan data primarily to:

Accepted Answer

Help identify potential discriminatory lending patterns and ensure fair lending

Answer

Set interest rate caps on mortgage products

Answer

Calculate the lender's Community Reinvestment Act (CRA) rating

Answer

Establish maximum loan limits for conforming mortgages

Question 7

A CMB professional receives a referral fee from a title company for directing clients to that company. Under RESPA Section 8, this arrangement is:

Accepted Answer

Prohibited because it constitutes an unearned kickback

Answer

Permitted if disclosed on the Loan Estimate

Answer

Allowed if the fee is under $100

Answer

Legal only if the title company is affiliated with the lender