CRMP Ethics and Professional Conduct 2 — Questions and Answers
Question 1: A CRMP counsels a borrower whose adult child is pressuring them to take out a reverse mortgage to fund the child's business. What is the ethical obligation?
- Proceed if the borrower verbally agrees
- Explore whether the decision is truly voluntary and in the borrower's best interest (Correct answer)
- Defer to the family member since they have financial expertise
- Recommend the largest available loan amount to satisfy both parties
Correct answer: Explore whether the decision is truly voluntary and in the borrower's best interest
CRMPs must ensure borrower decisions are free from undue influence and genuinely serve the borrower's interests.
Question 2: Which practice would constitute a conflict of interest for a CRMP?
- Referring borrowers to HUD-approved housing counselors
- Receiving undisclosed referral fees from a title company recommended to borrowers (Correct answer)
- Disclosing all lender fees upfront in the Loan Estimate
- Maintaining separate professional and personal finances
Correct answer: Receiving undisclosed referral fees from a title company recommended to borrowers
Undisclosed referral fees create a financial conflict of interest that undermines the borrower's trust and violates NRMLA ethics standards.
Question 3: A CRMP realizes after closing that they made an error in the loan disclosure that disadvantaged the borrower. What should they do?
- Do nothing since the loan has already closed
- Disclose the error and work to correct it through appropriate channels (Correct answer)
- Blame the title company to deflect responsibility
- Only act if the borrower discovers the error independently
Correct answer: Disclose the error and work to correct it through appropriate channels
Ethical professionals proactively disclose and correct errors regardless of whether the borrower has noticed.
Question 4: Under NRMLA's Code of Ethics, how should a CRMP handle a situation where a competitor is making misleading claims about their own products?
- Match the competitor's marketing to stay competitive
- Report the misconduct to NRMLA and appropriate regulatory bodies (Correct answer)
- Ignore it as industry competition is expected
- Directly confront the competitor's clients with the truth
Correct answer: Report the misconduct to NRMLA and appropriate regulatory bodies
NRMLA members are expected to report unethical conduct that harms consumers or the industry's reputation.
Question 5: What does 'informed consent' require of a CRMP before a borrower signs reverse mortgage documents?
- The borrower must sign a waiver acknowledging receipt of any document
- The borrower must understand the loan terms, risks, and alternatives in a language they comprehend (Correct answer)
- The borrower's attorney must approve all documents
- The borrower must complete a written test on reverse mortgages
Correct answer: The borrower must understand the loan terms, risks, and alternatives in a language they comprehend
Informed consent requires that borrowers genuinely understand what they are agreeing to, including risks and alternatives.
Question 6: A CRMP is approached by a real estate agent offering a commission split for every reverse mortgage borrower referred. This arrangement is:
- Permissible if both parties disclose it verbally
- A potential RESPA violation and ethical breach if not properly structured (Correct answer)
- Standard practice in the mortgage industry
- Only prohibited if the borrower is under age 70
Correct answer: A potential RESPA violation and ethical breach if not properly structured
RESPA prohibits kickbacks and unearned fee-splitting arrangements that are not for legitimate services rendered.
Question 7: Which statement best reflects the ethical duty of competence for a CRMP?
- Complete the CRMP exam once and rely on that knowledge indefinitely
- Continuously update knowledge through education as products, regulations, and markets evolve (Correct answer)
- Delegate complex questions to underwriters without disclosing limitations to borrowers
- Limit practice to loan types covered during initial certification only
Correct answer: Continuously update knowledge through education as products, regulations, and markets evolve
Ongoing education is essential because reverse mortgage regulations, products, and best practices change over time.
CRMP Ethics and Professional Conduct 2
A CRMP counsels a borrower whose adult child is pressuring them to take out a reverse mortgage to fund the child's business.
What is the ethical obligation?