Professional Ethics and Conduct Flashcards
7 cards from real CMC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Professional Ethics and Conduct flashcards as text
A client in financial distress asks a CMC to recommend a loan modification that would lower payments. The consultant has no experience with loan modifications. Ethically, the CMC should:
Answer: Refer the client to a qualified professional and decline to provide advice outside competence
Practicing outside one's area of competence violates professional ethics; referral to a qualified specialist protects the client.
The Home Mortgage Disclosure Act (HMDA) requires mortgage lenders to collect and report data primarily to:
Answer: Identify potential discriminatory lending patterns
HMDA data collection enables regulators and the public to identify and address potential fair lending violations and discriminatory patterns.
If a mortgage consultant becomes aware that a property appraisal has been inflated at the lender's request, the ethical response is to:
Answer: Refuse to use the fraudulent appraisal and report the conduct
Appraisal fraud harms consumers and the financial system; consultants must refuse to participate and report known fraud.
A CMC's duty of confidentiality means that client financial information may be shared:
Answer: Only as necessary to complete the transaction or as required by law
Client confidentiality limits disclosure to parties necessary for the transaction and legally mandated disclosures.
Under the Dodd-Frank Act, a mortgage loan originator's compensation may NOT be based on:
Answer: The interest rate or other loan terms
Dodd-Frank prohibits compensation tied to loan terms such as interest rate, APR, or loan amount to prevent steering into higher-cost products.
A consultant who uses high-pressure sales tactics to push a client into a loan product the client expressed hesitation about is most likely violating which ethical principle?
Answer: Respect for client autonomy and informed consent
Clients have the right to make decisions free from coercion; overriding a client's hesitation through pressure violates the principle of autonomy.
When a loan applicant asks a CMC to explain the Annual Percentage Rate (APR) versus the interest rate, the consultant is ethically obligated to:
Answer: Provide a clear, accurate explanation of both figures and how they differ
Transparency and client education are ethical duties; consultants must explain material loan terms clearly and accurately.