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

An MLO who knowingly proceeds with a fraudulent application can be charged with aiding and abetting mortgage fraud under federal law.

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

Under TILA-RESPA Integrated Disclosure (TRID) rules, the Loan Estimate must be delivered within three business days of application.

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

Both the Fair Housing Act and ECOA prohibit discrimination in lending based on national origin and other protected characteristics.

Question 4

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

Accepted Answer

Annually by December 31, with most states

Answer

Most state MLO licenses and NMLS registrations require annual renewal, typically completed by December 31 of each year.

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

Borrowers may waive the three-day waiting period only in cases of a bona fide personal financial emergency that must be documented.

Mortgage Practice Test