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 CMPS advisor is approached by a real estate agent who offers referral fees for mortgage business. What is the ethical and legal concern?
Answer: RESPA prohibits unearned referral fees that inflate settlement costs
RESPA (Real Estate Settlement Procedures Act) prohibits kickbacks and unearned fees in real estate settlement transactions.
Which scenario represents a conflict of interest that must be disclosed to the client?
Answer: The planner's firm owns a share of the title company being recommended
Ownership interests in affiliated settlement service providers create conflicts of interest that must be fully disclosed under RESPA's Affiliated Business Arrangement rules.
A client shares sensitive financial information with their CMPS advisor. Under ethical guidelines, this information should be:
Answer: Used only for purposes the client has authorized
Client financial information is confidential and may only be used for authorized purposes such as processing the client's mortgage application.
What is 'steering' in mortgage lending, and why is it considered unethical?
Answer: Directing clients to higher-cost loans to increase broker compensation
Steering involves directing clients to loan products that benefit the originator financially rather than the client, which is prohibited under the Dodd-Frank Act.
A mortgage planner suspects a client may be a victim of elder financial abuse by a family member pressuring a cash-out refinance. The planner should:
Answer: Pause and consult compliance or legal counsel before proceeding
Suspected elder financial abuse requires the planner to halt the transaction and seek guidance from compliance or legal resources to protect the vulnerable client.
What is the primary ethical reason a CMPS should document all client counseling sessions?
Answer: To create a clear record of advice given and client acknowledgment
Documentation protects both the client and the professional by creating an accurate record of advice provided and the client's informed decisions.
Under the Fair Housing Act, a mortgage planner must ensure that:
Answer: All clients receive equal treatment regardless of protected class status
The Fair Housing Act prohibits discrimination in mortgage lending based on race, color, religion, national origin, sex, disability, or familial status.