Ethical Standards & Professional Conduct Flashcards
7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethical Standards & Professional Conduct flashcards as text
What is the primary purpose of an underwriter maintaining a complete and accurate credit file?
Answer: To provide a defensible record of the credit decision
A thorough, accurate credit file documents the basis for the underwriting decision and protects the lender in repurchase demands, audits, or regulatory reviews.
An underwriter is pressured to clear conditions on a file without receiving the actual documents. This situation represents a violation of which ethical principle?
Answer: Professional integrity and documentation standards
Clearing conditions without receiving required documents compromises professional integrity and exposes the institution to repurchase risk and fraud liability.
How should a CRU-designated underwriter handle a conflict of interest when a close relative applies for a mortgage at their institution?
Answer: Recuse themselves and refer the file to another underwriter
When a personal relationship creates a conflict of interest, the underwriter must recuse themselves and transfer the file to an unrelated underwriter.
Under the CRU code of ethics, which action best demonstrates a commitment to continuing professional development?
Answer: Staying current with industry guidelines, regulations, and best practices
Professional ethics require CRU designees to remain current with evolving guidelines, regulatory changes, and industry standards to serve borrowers and employers competently.
A borrower's stated self-employment income is significantly higher than what is supported by bank statements. What ethical concern does this raise?
Answer: It may indicate income misrepresentation requiring further documentation
A significant discrepancy between stated income and bank statement deposits is a red flag for potential income fraud and requires additional documentation.
Which behavior violates the ethical obligation of confidentiality in residential underwriting?
Answer: Discussing a borrower's credit profile with an unauthorized third party
Sharing non-public personal financial information with unauthorized parties violates borrower confidentiality and applicable privacy laws such as the Gramm-Leach-Bliley Act.
Which scenario best illustrates predatory lending, which underwriters are ethically required to identify and avoid participating in?
Answer: Placing a borrower in a high-cost loan despite qualifying for a lower-rate product
Steering a borrower to a higher-cost loan when they qualify for better terms constitutes predatory lending, which underwriters must flag and refuse to support.