Ethics and Client Counseling Flashcards
7 cards from real CMPS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethics and Client Counseling flashcards as text
A mortgage planner discovers mid-process that a client's income documentation contains an inconsistency. What is the ethical obligation?
Answer: Inform the client and request corrected documentation
Ethical mortgage planners must address documentation inconsistencies with the client and ensure accurate, complete files are submitted.
Which concept best describes a mortgage planner's duty to act in the client's best financial interest rather than for personal gain?
Answer: Fiduciary duty
A fiduciary duty requires the mortgage planner to prioritize the client's financial well-being above personal or business interests.
A client asks their CMPS to recommend the mortgage product that pays the planner the highest commission. How should the planner respond?
Answer: Explain that recommendations are based on the client's best interests, not compensation
Ethical professionals must base recommendations on client suitability, not compensation incentives, even if the client suggests otherwise.
What does 'informed consent' mean in the context of mortgage counseling?
Answer: The client understands the risks and terms before agreeing to proceed
Informed consent requires that clients fully understand loan terms, costs, and risks before committing to a mortgage product.
A CMPS professional learns that a competing advisor made misleading statements to poach a mutual client. The ethical response is to:
Answer: Report the misconduct to the appropriate licensing authority
Reporting misconduct to the appropriate regulatory body upholds industry integrity and protects consumers.
Which practice violates the ethical principle of transparency in mortgage planning?
Answer: Burying yield-spread premiums in closing documents without disclosure
Concealing yield-spread premiums or other compensation in opaque disclosures violates transparency and fair dealing standards.
When a client's financial situation makes them ineligible for the loan they want, what is the ethical approach?
Answer: Honestly explain the situation and explore alternative options
Ethical mortgage planners provide honest assessments and help clients explore legitimate alternatives rather than falsifying information.