CRMP Ethics and Professional Conduct 3 — Questions and Answers
Question 1: A borrower with early-stage dementia wants to proceed with a reverse mortgage without involving family. What is the most ethical course of action?
- Process the loan immediately to honor the borrower's stated wishes
- Assess capacity, consult with a counselor, and consider involving appropriate support parties (Correct answer)
- Refuse the loan outright because of the diagnosis
- Ask the borrower to sign a capacity waiver and proceed
Correct answer: Assess capacity, consult with a counselor, and consider involving appropriate support parties
Cognitive impairment raises capacity concerns that require careful assessment and may necessitate involving counselors or legal guardians.
Question 2: How should a CRMP respond when a borrower asks them to recommend an elder law attorney?
- Refuse all attorney referrals to avoid liability
- Provide a list of qualified attorneys without steering toward one who pays referral fees (Correct answer)
- Recommend the attorney who offers the best referral arrangement
- Tell the borrower attorneys are unnecessary for reverse mortgages
Correct answer: Provide a list of qualified attorneys without steering toward one who pays referral fees
CRMPs may provide referrals but must avoid steering based on personal financial benefit to preserve impartiality.
Question 3: What is the primary purpose of the mandatory independent housing counseling required before a HECM loan closes?
- To satisfy a lender's insurance requirement
- To ensure borrowers receive unbiased information about the loan and alternatives from an independent source (Correct answer)
- To allow the lender to verify the borrower's financial literacy
- To generate required documentation for the FHA endorsement file
Correct answer: To ensure borrowers receive unbiased information about the loan and alternatives from an independent source
Independent counseling protects borrowers by providing objective information free from any lender influence.
Question 4: A CRMP discovers that a borrower provided false information on their loan application. What is the appropriate response?
- Overlook minor discrepancies to help the borrower qualify
- Halt the process and address the discrepancy with the borrower and lender per compliance requirements (Correct answer)
- Correct the application on the borrower's behalf without disclosure
- Proceed since the underwriter will catch errors during review
Correct answer: Halt the process and address the discrepancy with the borrower and lender per compliance requirements
CRMPs cannot knowingly participate in misrepresentation and must escalate discovered inaccuracies through proper channels.
Question 5: Which borrower population characteristic most heightens the ethical obligations of a CRMP?
- High net worth and multiple properties
- Advanced age, potential cognitive decline, and fixed-income dependence (Correct answer)
- Primary residence in a high-cost metropolitan area
- Previous experience with refinancing traditional mortgages
Correct answer: Advanced age, potential cognitive decline, and fixed-income dependence
Elderly borrowers on fixed incomes with potential cognitive vulnerabilities require heightened duty of care and clear communication.
Question 6: A CRMP is asked by their employer to meet a monthly quota by rushing borrowers through the process. What is the ethical response?
- Meet the quota since employer directives take precedence
- Maintain proper disclosure and counseling timelines regardless of production pressure (Correct answer)
- Reduce explanation time while maintaining all required signatures
- Report the quota to borrowers so they can make a faster decision
Correct answer: Maintain proper disclosure and counseling timelines regardless of production pressure
Production pressure does not override the ethical duty to ensure borrowers have adequate time to understand loan terms.
Question 7: Which action by a CRMP would most directly violate the principle of non-maleficence (do no harm)?
- Providing a Good Faith Estimate within required timeframes
- Recommending a reverse mortgage to a borrower whose primary goal could be better served by a different product (Correct answer)
- Disclosing all lender compensation to the borrower
- Explaining loan terms in plain language
Correct answer: Recommending a reverse mortgage to a borrower whose primary goal could be better served by a different product
Recommending an unsuitable product when a better alternative exists causes direct financial harm to the borrower.
CRMP Ethics and Professional Conduct 3
A borrower with early-stage dementia wants to proceed with a reverse mortgage without involving family.
What is the most ethical course of action?