Ethical Standards & Professional Conduct Flashcards
7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethical Standards & Professional Conduct flashcards as text
An underwriter discovers that a loan officer has submitted inflated appraisals on multiple files. What is the underwriter's ethical obligation?
Answer: Report the pattern to supervisory management or compliance
Underwriters must report suspected fraud or appraisal manipulation to compliance or management — concealing known misconduct violates professional ethics.
Which statement best describes the concept of 'independence' in residential underwriting ethics?
Answer: Underwriters must make credit decisions free from undue pressure or bias
Independence requires that underwriters render credit decisions solely based on borrower qualifications and program guidelines, without coercion.
A borrower's file contains a gift letter, but the underwriter suspects the funds are actually a loan. What is the appropriate action?
Answer: Request additional documentation to verify the source of funds
When red flags suggest a gift may be an undisclosed loan, the underwriter must request documentation to verify the true nature and source of funds.
Under ethical professional standards, how should an underwriter handle a request from a manager to approve a borderline loan for a key client?
Answer: Document the manager's request and apply guidelines consistently
Underwriters should document any override requests and apply program guidelines consistently, ensuring a defensible paper trail.
What does the Fair Housing Act prohibit underwriters from doing?
Answer: Using race, national origin, or religion as underwriting factors
The Fair Housing Act prohibits discrimination in residential lending based on protected classes including race, color, national origin, sex, religion, familial status, and disability.
A CRU designee discovers a clerical error in a closed loan that resulted in incorrect fee disclosures. What is the ethical course of action?
Answer: Notify compliance so corrective action can be taken
Ethical professionals must disclose errors that affect consumer disclosures so that the institution can assess and take appropriate corrective action.
Which practice is considered an ethical red flag in the underwriting review process?
Answer: Consistently approving loans only after receiving calls from a specific broker
A pattern of approvals following contact from a specific broker suggests undue influence and is a red flag for compromised underwriting independence.