CRU Ethical Standards & Professional Conduct 2

Question 1

An underwriter discovers that a loan officer has submitted inflated appraisals on multiple files. What is the underwriter's ethical obligation?

Accepted Answer

Report the pattern to supervisory management or compliance

Answer

Underwriters must report suspected fraud or appraisal manipulation to compliance or management — concealing known misconduct violates professional ethics.

Question 2

Which statement best describes the concept of 'independence' in residential underwriting ethics?

Accepted Answer

Underwriters must make credit decisions free from undue pressure or bias

Answer

Independence requires that underwriters render credit decisions solely based on borrower qualifications and program guidelines, without coercion.

Question 3

A borrower's file contains a gift letter, but the underwriter suspects the funds are actually a loan. What is the appropriate action?

Accepted Answer

Request additional documentation to verify the source of funds

Answer

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.

Question 4

Under ethical professional standards, how should an underwriter handle a request from a manager to approve a borderline loan for a key client?

Accepted Answer

Document the manager's request and apply guidelines consistently

Answer

Underwriters should document any override requests and apply program guidelines consistently, ensuring a defensible paper trail.

Question 5

What does the Fair Housing Act prohibit underwriters from doing?

Accepted Answer

Using race, national origin, or religion as underwriting factors

Answer

The Fair Housing Act prohibits discrimination in residential lending based on protected classes including race, color, national origin, sex, religion, familial status, and disability.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Ethical Standards & Professional Conduct 2