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
Which ethical obligation does a CRU designee have when they identify a systemic underwriting guideline that appears to have a disparate impact on a protected class?
Answer: Report the concern to compliance or legal for fair lending review
Guidelines with potential disparate impact must be escalated to compliance or legal for a fair lending analysis rather than ignored or unilaterally altered.
An underwriter's supervisor asks them to approve a loan that the underwriter believes does not meet guidelines. What is the most ethical course of action?
Answer: Decline the approval and document the supervisor's override request in the file
The underwriter should decline the approval, clearly document the override request, and escalate through appropriate channels to protect themselves and the institution.
What is the ethical implication of an underwriter accepting meals or gifts from a mortgage broker whose files they regularly underwrite?
Answer: It creates a potential conflict of interest that could bias credit decisions
Accepting gifts from business sources whose files the underwriter reviews creates a real or perceived conflict of interest that can compromise underwriting independence.
Which action demonstrates proper ethical conduct when an underwriter is unsure whether a specific income type qualifies under agency guidelines?
Answer: Research current agency guidelines or consult a compliance resource before deciding
When guidelines are unclear, the ethical course is to research current agency guidance or consult compliance, not to rely on prior practice or assume approval.
Under the Homeowners Protection Act, what ethical obligation does an underwriter have regarding Private Mortgage Insurance (PMI) cancellation rights?
Answer: Underwriters must ensure loans are structured so borrowers receive required PMI cancellation disclosures
Underwriters should ensure transactions are properly structured to comply with the Homeowners Protection Act, which mandates automatic PMI cancellation disclosures for conventional loans.
A borrower submits pay stubs that appear altered. The underwriter approves the loan without investigating. This violates which ethical standard?
Answer: The standard of due diligence and professional skepticism
Approving a loan without investigating red flags in income documentation violates the underwriter's duty of due diligence and professional skepticism.
What ethical responsibility does an underwriter have when working with borrowers who have limited English proficiency (LEP)?
Answer: Ensure the borrower has access to translated materials or interpreter services as required
Lenders are required under fair lending principles and agency guidelines to provide LEP borrowers with meaningful access to loan products and disclosures, which underwriters must support.