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

Regulation B requires lenders to provide notice of adverse action within 30 days of receiving a completed credit application.

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

While no federal law mandates loan documents in other languages, lenders must not discriminate against LEP borrowers and should inform them of translation resources.

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

Appraisal fraud occurs when an appraiser misrepresents property value, often under pressure from parties who benefit from a higher valuation.

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

Both RESPA and Regulation Z (TILA) impose federal recordkeeping requirements that mortgage companies must comply with.

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

Signing as originator on a loan you did not actually originate is false certification and constitutes mortgage fraud.

Mortgage Practice Test

Mortgage Practice Test

Mortgage Ethics and Professional Conduct 4