Mortgage Mortgage Ethics and Professional Conduct Questions and Answers 2

Question 1

A mortgage loan originator receives a referral fee from a real estate agent for directing borrowers to their services. Under RESPA, this arrangement is:

Accepted Answer

Prohibited as an illegal kickback

Answer

Permissible if the fee is disclosed at closing

Answer

Allowed if the borrower consents in writing

Answer

Acceptable if the fee is under $500

Question 2

Which action would constitute steering under federal mortgage lending regulations?

Accepted Answer

Directing a qualified borrower to a higher-cost loan to earn a larger commission

Answer

Offering a borrower multiple loan products to compare

Answer

Providing rate sheets from different lenders

Answer

Explaining the differences between fixed and adjustable rate mortgages

Question 3

A borrower asks a loan officer to inflate their income on the application to qualify for a larger mortgage. The loan officer should:

Accepted Answer

Refuse and document the request in the loan file

Answer

Comply if the borrower signs a statement of responsibility

Answer

Adjust the income slightly to help the borrower qualify

Answer

Report the borrower to the IRS immediately

Question 4

Under the Dodd-Frank Act, a mortgage loan originator's compensation may NOT be based on:

Accepted Answer

The terms or conditions of the loan other than the principal amount

Answer

The loan originator's years of experience

Answer

The number of loans originated per quarter

Answer

The overall profitability of the lending institution

Question 5

A mortgage professional discovers that a colleague has been backdating documents to meet a program deadline. What is the most appropriate course of action?

Accepted Answer

Report the conduct to their compliance department or supervisor

Answer

Ignore it since it does not affect their own transactions

Answer

Confront the colleague privately and ask them to stop

Answer

Wait to see if an auditor catches the issue

Question 6

Which practice violates the Equal Credit Opportunity Act (ECOA) in mortgage lending?

Accepted Answer

Discouraging an applicant from applying based on their national origin

Answer

Requiring a minimum credit score for loan approval

Answer

Offering different interest rates based on creditworthiness

Answer

Denying a loan due to insufficient collateral value