SAFE - Certified Secure and Fair Enforcement Mortgage Loan Originator Ethics and Professional Conduct Questions and Answers

Question 1

A mortgage loan originator (MLO) tells a client that the advertised interest rate is 'guaranteed,' but fails to disclose that this rate is only locked for 15 days and that significant fees apply.
This action would most likely be considered what type of prohibited conduct?

Accepted Answer

A deceptive act under UDAAP.

Answer

A kickback under RESPA.

Answer

A violation of the Fair Housing Act.

Answer

Permissible puffing in advertising.

Question 2

An MLO has a brother who is a real estate agent. The MLO pays his brother a $500 'marketing fee' for every closed loan that the brother refers to him. Which law is being violated?

Accepted Answer

Real Estate Settlement Procedures Act (RESPA)

Answer

Truth in Lending Act (TILA)

Answer

Fair Credit Reporting Act (FCRA)

Answer

Home Ownership and Equity Protection Act (HOEPA)

Question 3

Which of the following scenarios best illustrates an MLO breaching their duty of care to a borrower?

Accepted Answer

Failing to place a borrower into the lowest-cost loan program for which they qualify because a higher-cost loan offers the MLO a larger commission.

Answer

Providing the borrower with a list of three approved appraisers to choose from.

Answer

Disclosing the MLO's NMLS unique identifier on all application forms and advertisements.

Answer

Refusing to process a loan application for an individual who is on public assistance, citing insufficient income.

Question 4

Under the SAFE Act's ethics requirements, MLOs must complete continuing education annually. How many of these hours must be dedicated specifically to ethics?

Accepted Answer

2 hours

Answer

1 hour

Answer

3 hours

Answer

4 hours

Question 5

An MLO advertises a 'No Closing Costs' loan on a large billboard. However, the fine print at the very bottom, which is unreadable from a car, states that the borrower is still responsible for third-party fees like appraisal and title insurance. This advertising practice is a potential violation of which regulation?

Accepted Answer

The Mortgage Acts and Practices (MAP) Rule - Regulation N

Answer

The Equal Credit Opportunity Act (ECOA)

Answer

The Home Mortgage Disclosure Act (HMDA)

Answer

The Fair and Accurate Credit Transactions Act (FACTA)

Question 6

A borrower expresses to their MLO that they are on a tight, fixed income and are very worried about their monthly payment increasing. The MLO, who works for a lender that heavily incentivizes the sale of adjustable-rate mortgages (ARMs), presents only ARM options to the borrower, emphasizing the low initial 'teaser' rate. This is an example of:

Accepted Answer

An abusive act under UDAAP.

Answer

A violation of RESPA Section 8.

Answer

A permissible sales technique.

Answer

A required disclosure under TILA.

A mortgage loan originator (MLO) tells a client that the advertised interest rate is 'guaranteed,' but fails to disclose that this rate is only locked for 15 days and that significant fees apply.This action would most likely be considered what type of prohibited conduct?

A mortgage loan originator (MLO) tells a client that the advertised interest rate is 'guaranteed,' but fails to disclose that this rate is only locked for 15 days and that significant fees apply.
This action would most likely be considered what type of prohibited conduct?