Mortgage Ethics and Professional Conduct 3

Question 1

A borrower provides falsified tax returns to qualify for a mortgage loan. If the MLO suspects fraud but proceeds anyway, the MLO may be charged with:

Accepted Answer

Aiding and abetting mortgage fraud

Answer

Misrepresentation of material fact only

Answer

A minor regulatory infraction

Answer

Breach of contract with the lender

Question 2

The Loan Estimate must be delivered to the borrower within how many business days of receiving a completed loan application?

Accepted Answer

3 business days

Answer

1 business day

Answer

5 business days

Answer

7 business days

Question 3

A lender charges a borrower a higher interest rate based on their national origin rather than their creditworthiness. This violates which law?

Accepted Answer

Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA)

Answer

Gramm-Leach-Bliley Act (GLBA)

Answer

Home Ownership and Equity Protection Act (HOEPA)

Answer

Community Reinvestment Act (CRA)

Question 4

When must an MLO renew their NMLS registration or state license?

Accepted Answer

Annually by December 31, with most states

Answer

Every two years on their anniversary date

Answer

Every three years at the federal level

Answer

Only when changing employers

Question 5

A borrower waives their right to the three-day waiting period before closing. Under what limited circumstances is this allowed?

Accepted Answer

Only when the borrower has a bona fide personal financial emergency

Answer

It is never allowed under any circumstances

Answer

When the loan amount is below the conforming loan limit

Answer

When the lender and borrower mutually agree in writing

Question 6

An MLO receives a $500 gift card from a real estate agent as a thank-you for referrals. This arrangement is:

Accepted Answer

A violation of RESPA's anti-kickback provisions

Answer

Permitted if disclosed to both parties

Answer

Legal under the de minimis exemption up to $25

Answer

Allowed if the gift is not cash

Question 7

Which of the following is considered a red flag for identity theft in a mortgage application?

Accepted Answer

A notice of address discrepancy from the credit bureau

Answer

Borrower's address matches their employer's address

Answer

Borrower requests paper statements instead of electronic

Answer

Loan amount equals exactly the home's listed price