SAFE Ethics and Professional Conduct 2

Question 1

An MLO discovers that a borrower's income was overstated on an already-submitted application. What is the correct ethical action?

Accepted Answer

Notify the lender and correct the application immediately

Answer

MLOs must ensure all information submitted to lenders is accurate and must correct errors as soon as they are discovered.

Question 2

Under the SAFE Act, which behavior would constitute a violation of an MLO's ethical obligations?

Accepted Answer

Steering a borrower toward a higher-rate product to earn a larger commission

Answer

Steering borrowers into less favorable loan products for personal financial gain is an unethical practice prohibited under federal law.

Question 3

A borrower who is a personal friend asks an MLO to skip some required disclosures to speed up closing. The MLO should:

Accepted Answer

Provide all required disclosures regardless of the borrower's relationship

Answer

Required disclosures cannot be waived by the borrower or skipped by the MLO; they are legally mandated protections.

Question 4

Which of the following best describes the duty of confidentiality for an MLO?

Accepted Answer

Protecting non-public personal information from unauthorized disclosure

Answer

MLOs must protect non-public personal information (NPI) under the Gramm-Leach-Bliley Act and ethical standards.

Question 5

An MLO receives a referral fee from a title company for directing borrowers to use their services. This practice is:

Accepted Answer

Prohibited under RESPA Section 8 regardless of disclosure

Answer

RESPA Section 8 prohibits kickbacks and referral fees between settlement service providers regardless of disclosure.

(SAFE) Certified Secure and Fair Enforcement Mortgage Loan Originator Practice Test