Mortgage Ethics and Professional Conduct 4

Question 1

Under Regulation B (ECOA), a lender must notify an applicant of adverse action within how many days of receiving a completed application?

Accepted Answer

30 days

Answer

10 days

Answer

15 days

Answer

45 days

Question 2

A borrower with limited English proficiency requests loan documents in Spanish. The lender is required to:

Accepted Answer

Inform the borrower of available translation resources without penalizing them

Answer

Provide all documents in Spanish by federal mandate

Answer

Deny the loan if English documents cannot be understood

Answer

Charge a translation fee to provide Spanish documents

Question 3

Which practice involves an appraiser inflating a property's value at a lender's or originator's request?

Accepted Answer

Appraisal fraud / value inflation

Answer

Automated valuation model (AVM) usage

Answer

Comparable sales adjustment

Answer

Desk review underwriting

Question 4

A mortgage company fails to maintain required records for the mandated retention period. This is a violation of:

Accepted Answer

Federal recordkeeping requirements under RESPA and Regulation Z

Answer

Only state licensing requirements

Answer

The lender's internal compliance policy only

Answer

The Sarbanes-Oxley Act exclusively

Question 5

An MLO is approached by a colleague who asks them to sign as the originator on a loan the colleague originated. This is an example of:

Accepted Answer

Loan fraud through false certification

Answer

A permissible team transaction

Answer

A standard supervisory override

Answer

Permissible co-origination under NMLS rules

Question 6

The Home Ownership and Equity Protection Act (HOEPA) primarily protects borrowers from:

Accepted Answer

Abusive terms in high-cost mortgage loans

Answer

Prepayment penalties on conforming loans

Answer

Excessive appraisal fees on jumbo loans

Answer

Discriminatory denial of FHA-insured loans

Question 7

A borrower complains to an MLO that they were denied a loan due to receiving public assistance income. Under ECOA, the lender:

Accepted Answer

Cannot discriminate against applicants because they receive public assistance income

Answer

May legally exclude public assistance income from consideration

Answer

Must require additional documentation only for public assistance income

Answer

Is permitted to apply a discount factor to public assistance income