CMC Professional Ethics and Conduct 2

Question 1

A mortgage consultant discovers mid-process that a competing lender offers a significantly better rate for the client's situation. What is the ethical obligation?

Accepted Answer

Disclose the better option to the client and discuss alternatives

Answer

Proceed with the current lender to protect the business relationship

Answer

Ignore it since the client already signed the initial application

Answer

Report the competing lender to the state regulator

Question 2

Under RESPA, which of the following is strictly prohibited for a mortgage consultant?

Accepted Answer

Accepting a referral fee from a title company for steering clients

Answer

Charging a processing fee disclosed on the Loan Estimate

Answer

Ordering a third-party appraisal

Answer

Providing a written Good Faith Estimate

Question 3

A client asks a CMC to help them state a higher income on the loan application to qualify for a larger mortgage. The consultant should:

Accepted Answer

Refuse and explain that income misrepresentation is mortgage fraud

Answer

Comply if the client signs an acknowledgment

Answer

Adjust only the gross income figure to avoid detection

Answer

Consult the lender's underwriter before deciding

Question 4

When a CMC has a personal financial interest in a property a client is purchasing, what must occur?

Accepted Answer

Full disclosure of the conflict must be made to the client in writing

Answer

The consultant may proceed without disclosure if the interest is minor

Answer

The transaction must be cancelled immediately

Answer

The client's attorney must be notified but not the client directly

Question 5

The Equal Credit Opportunity Act (ECOA) prohibits mortgage consultants from discriminating based on which of the following?

Accepted Answer

Marital status or national origin

Answer

Credit score below 580

Answer

Debt-to-income ratio exceeding 43%

Answer

Insufficient employment history

Question 6

A client's loan application contains an inadvertent clerical error that would cause the client to qualify for a lower loan amount. Ethically, the CMC should:

Accepted Answer

Correct the error and resubmit accurate information

Answer

Leave the error since correcting it would reduce the loan and commission

Answer

Ask the client to provide documents that support the incorrect figure

Answer

Wait to see if the underwriter catches the mistake

Question 7

Which practice best demonstrates a CMC's commitment to continuing professional competence?

Accepted Answer

Completing ongoing education and staying current on regulatory changes

Answer

Relying solely on knowledge obtained at initial licensing

Answer

Delegating complex questions to the lender's underwriting team

Answer

Limiting practice to loan types familiar from prior experience only