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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

  1. Under Regulation B (ECOA), a lender must notify an applicant of adverse action within how many days of receiving a completed application?

    Answer: 30 days

    Regulation B requires lenders to provide notice of adverse action within 30 days of receiving a completed credit application.

  2. A borrower with limited English proficiency requests loan documents in Spanish. The lender is required to:

    Answer: Inform the borrower of available translation resources without penalizing them

    While no federal law mandates loan documents in other languages, lenders must not discriminate against LEP borrowers and should inform them of translation resources.

  3. Which practice involves an appraiser inflating a property's value at a lender's or originator's request?

    Answer: Appraisal fraud / value inflation

    Appraisal fraud occurs when an appraiser misrepresents property value, often under pressure from parties who benefit from a higher valuation.

  4. A mortgage company fails to maintain required records for the mandated retention period. This is a violation of:

    Answer: Federal recordkeeping requirements under RESPA and Regulation Z

    Both RESPA and Regulation Z (TILA) impose federal recordkeeping requirements that mortgage companies must comply with.

  5. An MLO is approached by a colleague who asks them to sign as the originator on a loan the colleague originated. This is an example of:

    Answer: Loan fraud through false certification

    Signing as originator on a loan you did not actually originate is false certification and constitutes mortgage fraud.

  6. The Home Ownership and Equity Protection Act (HOEPA) primarily protects borrowers from:

    Answer: Abusive terms in high-cost mortgage loans

    HOEPA establishes additional disclosures and protections for high-cost mortgages that exceed certain APR or fee thresholds.

  7. A borrower complains to an MLO that they were denied a loan due to receiving public assistance income. Under ECOA, the lender:

    Answer: Cannot discriminate against applicants because they receive public assistance income

    ECOA prohibits creditors from discriminating against applicants because all or part of their income comes from public assistance programs.