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

Ethical standards require full disclosure of material fees, loan terms, and compensation arrangements so borrowers can make informed decisions.

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

The Fair Housing Act explicitly prohibits discrimination in residential real estate transactions, including mortgage lending, based on protected class status.

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

Reverse redlining (also called predatory steering) involves targeting qualified borrowers with unfair or high-cost products they don't need, often targeting minority communities.

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

Disclosure and obtaining informed consent from all affected parties is the required first step when a conflict of interest is identified, allowing parties to decide how to proceed.

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

A fiduciary duty obligates a mortgage broker to prioritize the client's best financial interest over their own, including recommending the most suitable loan product.

CMB - Certified Mortgage Banker Practice Test

CMB - Certified Mortgage Banker Practice Test

CMB Ethics and Professional Standards in Mortgage Banking