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 client insists on a loan structure the planner believes is financially harmful. After full disclosure, the client still wants to proceed. What should the planner do?
Answer: Document the advice given and the client's informed decision, then proceed if legal
After providing full disclosure and counseling, the planner should respect client autonomy, document the exchange, and proceed only if the loan is legal and not fraudulent.
Which of the following best describes 'predatory lending' in the mortgage context?
Answer: Using deceptive or unfair practices to impose abusive loan terms on borrowers
Predatory lending involves unfair, deceptive, or abusive practices that exploit borrowers, often resulting in loans they cannot afford or that carry excessive costs.
How should a CMPS handle a situation where two clients who are divorcing both seek advice on the same property refinance?
Answer: Recognize the conflict of interest and advise only one party, referring the other to a different planner
Representing both parties in an adversarial situation creates a conflict of interest; the planner should represent only one client and refer the other to independent counsel.
What does the CMPS Code of Ethics require regarding continuing education?
Answer: CMPS holders must complete ongoing education to maintain competency and uphold professional standards
The CMPS designation requires ongoing continuing education to ensure advisors maintain current knowledge and ethical standards throughout their career.
A mortgage planner learns that a client's employer has gone bankrupt after the loan was submitted but before closing. The ethical action is to:
Answer: Immediately disclose the material change to the lender
Material changes in a client's financial situation must be disclosed to the lender before closing, as concealment constitutes mortgage fraud.
Which of the following is an example of ethical client communication during the mortgage process?
Answer: Explaining key loan terms in plain language the client understands
Ethical client communication requires using clear, plain language so clients genuinely understand the terms and decisions they are making.
When a client asks a CMPS about tax deductibility of mortgage interest, the planner should:
Answer: Explain general concepts and refer the client to a qualified tax professional
Mortgage planners should provide general educational context on tax topics but refer clients to tax professionals for specific tax advice that falls outside their expertise.