FREE CMC Professional Ethics and Conduct Questions and Answers

Question 1

A Certified Mortgage Consultant (CMC) has a preferred lender relationship that results in higher compensation for the CMC on certain loan products.
A client qualifies for both a standard loan and one of the preferred lender's products, which has a slightly higher interest rate.
The CMC focuses exclusively on the benefits of the preferred lender's product.
This practice is a primary example of violating the duty to avoid:

Accepted Answer

Illegal steering.

Answer

Prudent risk management.

Answer

Standard comparative analysis.

Answer

Permissible marketing.

Question 2

During a casual conversation at a community event, a CMC is asked by a real estate agent about the status of a mutual client's loan application. The CMC confirms that the client was approved but mentions they needed a significant gift from a relative to meet the down payment requirement. This disclosure violates the CMC's ethical and legal obligations under which federal act?

Accepted Answer

Gramm-Leach-Bliley Act (GLBA)

Answer

Real Estate Settlement Procedures Act (RESPA)

Answer

Truth in Lending Act (TILA)

Answer

Home Mortgage Disclosure Act (HMDA)

Question 3

The fundamental concept of a mortgage consultant's fiduciary duty to a client is best described as an obligation to:

Accepted Answer

Place the client's best financial interests ahead of their own, acting with loyalty and good faith.

Answer

Guarantee the lowest possible interest rate, regardless of other loan terms.

Answer

Prioritize the lender's requirements to ensure a smooth closing process.

Answer

Ensure the loan application is approved by any means necessary.

Question 4

A CMC is working with a first-time homebuyer who is struggling to qualify. The client suggests they can get a friend to temporarily deposit funds into their bank account to make their assets look stronger. Which of the following is the CMC's most appropriate ethical response?

Accepted Answer

Refuse to participate and explain that submitting the application with misrepresented assets constitutes mortgage fraud.

Answer

Advise the client on the proper way to document a gift fund transfer.

Answer

Suggest the client wait until their own savings have increased.

Answer

Submit the application but make a note in the file about the temporary deposit.

Question 5

A CMC runs a radio advertisement that prominently features an incredibly low interest rate. However, this rate is only available for a specific, less common loan product with an extremely high credit score requirement, which is only mentioned in a rapidly spoken disclosure at the very end of the ad. This advertisement is likely in violation of which regulation?

Accepted Answer

Truth in Lending Act (Regulation Z).

Answer

Fair Housing Act.

Answer

Equal Credit Opportunity Act (ECOA).

Answer

Real Estate Settlement Procedures Act (RESPA).

Question 6

Which of the following actions by a CMC would be considered an unacceptable and unethical fee practice?

Accepted Answer

Accepting a cash 'thank you' payment directly from a title agent for referring them business.

Answer

Charging a flat origination fee that is fully disclosed on the Loan Estimate.

Answer

Receiving lender-paid compensation based on the final loan amount.

Answer

Charging a borrower for a third-party credit report fee that is passed through at actual cost.