CMPS Ethical Practices & Risk Management 4

Question 1

A CMPS advisor is approached by a developer who offers a commission override for every buyer the advisor steers to the developer's preferred lender. This arrangement is:

Accepted Answer

A violation of RESPA Section 8 regardless of disclosure

Answer

RESPA Section 8 prohibits kickback arrangements in settlement services regardless of disclosure or competitive pricing.

Question 2

What does 'suitability' mean in the context of CMPS ethical obligations?

Accepted Answer

Recommending mortgage products that align with the client's financial goals, risk tolerance, and long-term interests

Answer

Suitability requires that mortgage recommendations serve the client's overall financial objectives, not just minimum qualification standards.

Question 3

A client's loan file shows large, unexplained deposits in their bank statements. As a CMPS advisor, the appropriate action is to:

Accepted Answer

Source and document all large deposits per lender and regulatory requirements

Answer

Lenders and regulators require that large undocumented deposits be sourced to prevent money laundering and ensure asset legitimacy.

Question 4

Under Regulation B (ECOA), a lender must notify an applicant of adverse action within how many days of receiving a completed application?

Accepted Answer

30 days

Answer

ECOA Regulation B requires adverse action notices within 30 days of receiving a completed credit application.

Question 5

Which behavior would MOST likely constitute predatory lending?

Accepted Answer

Repeatedly refinancing a client into high-cost loans to generate fees without net benefit to the borrower

Answer

Loan flipping — repeatedly refinancing borrowers into high-cost products for fee income without client benefit — is a hallmark of predatory lending.

(CMPS) Certified Mortgage Planning Specialist Practice Test

(CMPS) Certified Mortgage Planning Specialist Practice Test

CMPS Ethical Practices & Risk Management 4