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 notices that a colleague is routinely approving clients who clearly cannot afford their loans. The ethical obligation is to:
Answer: Report the concern to a supervisor or compliance officer
Ethical professionals have an obligation to report practices that harm consumers or violate lending standards through proper internal compliance channels.
Under the Truth in Lending Act (TILA), what is the primary ethical purpose of the Loan Estimate?
Answer: To give clients clear, standardized cost information before they commit to the loan
The Loan Estimate provides standardized disclosure of loan terms and costs, enabling consumers to make informed decisions and compare offers ethically.
Which behavior demonstrates cultural competency in mortgage counseling?
Answer: Tailoring communication style while providing equal access to all loan options
Cultural competency involves adapting communication style to the client while ensuring equal, unbiased access to all appropriate loan products.
What is the ethical implication of a 'no-cost' mortgage offer that a CMPS presents to a client?
Answer: The costs are typically offset by a higher interest rate, which must be clearly explained
No-cost mortgages typically shift closing costs into a higher interest rate; planners must clearly explain this trade-off so clients can make informed decisions.
A client is considering a reverse mortgage and appears to not fully understand the product. What is the ethical requirement before proceeding?
Answer: Require the client to complete HUD-approved reverse mortgage counseling
Federal law requires that applicants for reverse mortgages complete HUD-approved counseling to ensure they fully understand the product before proceeding.
A planner receives a referral from a builder who only refers clients if the planner uses the builder's preferred title company. What ethical issue does this raise?
Answer: A potential RESPA violation and conflict of interest that must be disclosed or avoided
Conditional referral arrangements tied to using specific settlement service providers raise RESPA and conflict-of-interest concerns that must be disclosed or declined.
How does a CMPS professional demonstrate ethical integrity when market conditions change significantly after a client's initial consultation?
Answer: Proactively contact the client to update them on how changes may affect their plan
Proactively communicating material changes in market conditions demonstrates ethical transparency and genuine commitment to the client's best interests.