CRMP Ethics and Professional Conduct 4 — Questions and Answers
Question 1: Under NRMLA standards, a CRMP who learns of potential elder financial abuse during the application process should:
- Complete the loan transaction and report abuse afterwards
- Pause the transaction and report to Adult Protective Services or appropriate authorities (Correct answer)
- Confront the suspected abuser directly before taking other action
- Obtain written consent from the borrower before reporting
Correct answer: Pause the transaction and report to Adult Protective Services or appropriate authorities
Suspected elder financial abuse requires immediate reporting to protective services, which may supersede the transaction.
Question 2: What does the NRMLA Code of Ethics require regarding advertising and marketing for reverse mortgages?
- Ads may emphasize benefits without disclosing limitations to keep messaging positive
- Marketing must be accurate, not misleading, and include required disclosures about loan costs and obligations (Correct answer)
- Testimonials from satisfied borrowers are sufficient disclosure of product risks
- Marketing is governed solely by state law, not NRMLA standards
Correct answer: Marketing must be accurate, not misleading, and include required disclosures about loan costs and obligations
NRMLA requires that all marketing materials be truthful, balanced, and compliant with FHA and CFPB advertising rules.
Question 3: A non-borrowing spouse is not on the title of the property. What is the CRMP's ethical duty regarding their interests?
- Focus solely on the borrowing spouse as the client of record
- Explain deferral protections and potential displacement risks to both spouses (Correct answer)
- Advise the non-borrowing spouse to consult a separate lender
- Limit communication to the borrowing spouse to respect privacy
Correct answer: Explain deferral protections and potential displacement risks to both spouses
Non-borrowing spouses face significant risks and must be informed of their rights, deferral options, and potential consequences.
Question 4: A CRMP holds a CRMP designation from NRMLA. Which conduct would put that designation at risk?
- Completing continuing education requirements on time
- Engaging in undisclosed dual agency by representing both borrower and lender interests (Correct answer)
- Referring clients to HUD-approved counselors before closing
- Disclosing all compensation received from lenders
Correct answer: Engaging in undisclosed dual agency by representing both borrower and lender interests
Undisclosed dual agency violates loyalty and impartiality requirements that underpin the CRMP designation.
Question 5: How should a CRMP handle a borrower who speaks limited English and relies on a family member for translation?
- Accept the family member as an adequate translator to streamline the process
- Use a qualified independent translator or translated documents to ensure accurate communication (Correct answer)
- Proceed if the borrower can sign their name in English
- Recommend the borrower seek a lender who speaks their language
Correct answer: Use a qualified independent translator or translated documents to ensure accurate communication
Relying on interested family members for translation creates bias risk; independent translation protects borrower understanding.
Question 6: What ethical principle is violated when a CRMP omits mention of rising loan balances and potential equity erosion when presenting a reverse mortgage?
- Principle of efficiency
- Principle of full disclosure and transparency (Correct answer)
- Principle of regulatory compliance only
- Principle of professional brevity
Correct answer: Principle of full disclosure and transparency
Failing to disclose material risks like compounding interest and equity erosion violates the duty of full and fair disclosure.
Question 7: A CRMP who is also a licensed financial advisor recommends a reverse mortgage to fund an annuity product they sell. This situation most likely represents:
- An efficient cross-selling strategy benefiting the client
- A serious conflict of interest requiring full disclosure and possibly recusal (Correct answer)
- A normal dual-role arrangement common in financial services
- An acceptable practice if the borrower signs an acknowledgment form
Correct answer: A serious conflict of interest requiring full disclosure and possibly recusal
Dual roles that generate layered commissions create compounded conflicts of interest requiring transparent disclosure and independent advice.
CRMP Ethics and Professional Conduct 4
Under NRMLA standards, a CRMP who learns of potential elder financial abuse during the application process should: