Ethics and Professional Conduct Flashcards
7 cards from real Mortgage 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 Professional Conduct flashcards as text
A borrower provides falsified tax returns to qualify for a mortgage loan. If the MLO suspects fraud but proceeds anyway, the MLO may be charged with:
Answer: Aiding and abetting mortgage fraud
An MLO who knowingly proceeds with a fraudulent application can be charged with aiding and abetting mortgage fraud under federal law.
The Loan Estimate must be delivered to the borrower within how many business days of receiving a completed loan application?
Answer: 3 business days
Under TILA-RESPA Integrated Disclosure (TRID) rules, the Loan Estimate must be delivered within three business days of application.
A lender charges a borrower a higher interest rate based on their national origin rather than their creditworthiness. This violates which law?
Answer: Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA)
Both the Fair Housing Act and ECOA prohibit discrimination in lending based on national origin and other protected characteristics.
When must an MLO renew their NMLS registration or state license?
Answer: Annually by December 31, with most states
Most state MLO licenses and NMLS registrations require annual renewal, typically completed by December 31 of each year.
A borrower waives their right to the three-day waiting period before closing. Under what limited circumstances is this allowed?
Answer: Only when the borrower has a bona fide personal financial emergency
Borrowers may waive the three-day waiting period only in cases of a bona fide personal financial emergency that must be documented.
An MLO receives a $500 gift card from a real estate agent as a thank-you for referrals. This arrangement is:
Answer: A violation of RESPA's anti-kickback provisions
RESPA prohibits any thing of value exchanged for referrals of settlement services, regardless of the form or amount.
Which of the following is considered a red flag for identity theft in a mortgage application?
Answer: A notice of address discrepancy from the credit bureau
A notice of address discrepancy from the credit bureau is a standard red flag under the FTC's Red Flags Rule that MLOs must investigate.