CRMP Ethics and Professional Conduct 5 — Questions and Answers
Question 1: A CRMP is aware that their company is using an appraisal management company with a financial relationship to the lender. What should they do?
- Accept the arrangement as standard lender practice
- Disclose the relationship to the borrower and ensure appraisal independence requirements are met (Correct answer)
- Order a second appraisal without disclosing the concern
- Report only if the appraisal value seems inflated
Correct answer: Disclose the relationship to the borrower and ensure appraisal independence requirements are met
Lender-appraiser financial relationships must comply with independence requirements and be disclosed to protect borrower interests.
Question 2: Under NRMLA's Best Practices, what is required when a CRMP cannot serve a prospective borrower competently?
- Proceed and learn on the job to build competence
- Refer the borrower to another qualified professional and decline the engagement (Correct answer)
- Charge a reduced fee to offset the risk of errors
- Disclose limitations only if the borrower specifically asks about qualifications
Correct answer: Refer the borrower to another qualified professional and decline the engagement
Professional duty requires declining or redirecting engagements that exceed a practitioner's current competence.
Question 3: Which scenario best illustrates the ethical concept of 'suitability' in reverse mortgage counseling?
- A borrower qualifies for the maximum loan amount and proceeds to close
- A CRMP advises a borrower whose only goal is short-term liquidity to consider a HELOC first (Correct answer)
- A CRMP matches a borrower's property value to available loan limits
- A borrower with good credit history is approved without counseling
Correct answer: A CRMP advises a borrower whose only goal is short-term liquidity to consider a HELOC first
Suitability means matching the borrower's actual goals with the product best suited to meet them, even if that product is not a reverse mortgage.
Question 4: A CRMP receives a complaint from a borrower about the handling of their loan. According to professional ethics standards, what is the appropriate first step?
- Forward the complaint directly to the company's legal team without acknowledging it
- Acknowledge the complaint promptly, investigate thoroughly, and respond in good faith (Correct answer)
- Dismiss the complaint if the loan documentation was properly executed
- Offer a financial incentive to the borrower to withdraw the complaint
Correct answer: Acknowledge the complaint promptly, investigate thoroughly, and respond in good faith
Ethical complaint handling requires prompt acknowledgment, fair investigation, and transparent response regardless of perceived merit.
Question 5: What does 'fiduciary-like' responsibility mean in the context of a CRMP's relationship with borrowers?
- The CRMP is legally a fiduciary under all state laws
- The CRMP prioritizes borrower interests over personal gain even when not legally mandated (Correct answer)
- The CRMP may only accept fees disclosed in the loan estimate
- The CRMP must hold borrower funds in an escrow account
Correct answer: The CRMP prioritizes borrower interests over personal gain even when not legally mandated
While not always legally defined as fiduciaries, CRMPs are expected to act in the borrower's best interest as a professional standard.
Question 6: A colleague CRMP asks you to co-sign a loan application you have not reviewed. What is the ethical response?
- Co-sign as a professional courtesy since you trust your colleague
- Decline until you have independently reviewed and verified the application's accuracy (Correct answer)
- Sign but note that you did not personally originate the loan
- Ask the borrower to provide written permission before signing
Correct answer: Decline until you have independently reviewed and verified the application's accuracy
Co-signing any document without independent review makes you professionally and potentially legally responsible for its accuracy.
Question 7: The NRMLA Code of Ethics applies to which of the following parties?
- Only CRMP-certified professionals
- All NRMLA member companies and their employees engaged in reverse mortgage activities (Correct answer)
- Only company officers and senior management
- Only originators, not processors or underwriters
Correct answer: All NRMLA member companies and their employees engaged in reverse mortgage activities
NRMLA's Code of Ethics covers all member firms and their staff involved in reverse mortgage transactions, not just designated professionals.
CRMP Ethics and Professional Conduct 5
A CRMP is aware that their company is using an appraisal management company with a financial relationship to the lender.
What should they do?