Chapter 8: Ethics and Fraud

Question 1

Which of the following prevents a mortgage broker from choosing the appraiser for loans?
A. RESPA
B. Home Valuation Code of Conduct (HVCC)
C. ECOA
D. TILA

Answer 1

Answer B

The Home Valuation Code of Conduct (HVCC) prevents a mortgage
broker from choosing the appraiser for loans that are sold to Fannie Mae. TheDodd-Frank Act extended the law to include all mortgages.

Question 2

An individual who obtains or has obtained a financial product or service from a financial institution for personal, family or
household reasons. 
A. Customer 
B. Applicant 
C. Consumer 
D. Client

Answer 2

Answer C

A consumer is an individual who obtains or has obtained a financial product or service from a financial institution for personal, family or household reasons.

Question 3

An individual with a continuing relationship with a financial institution.
A. Customer 
B. Applicant 
C. Consumer 
D. Client

Answer 3

Answer A

A customer is a consumer with a continuing relationshipwith a financial institution.

Question 4

*** An appraisal result can only be reported to the
A. client, real estate agents, state regulatory agencies and peer review committees.
B. client, lenders, state regulatory agencies and peer review committees.
C. client, client-authorized individuals, state regulatory agencies and peer review committees.
D. client, MLO, state regulatory agencies and peer review committees.

Answer 4

Answer C

An appraiser must keep client information and appraisal results
confidential. Results can only be reported to the client, client-authorized individuals, state regulatory agencies and peer review committees

Question 5

Increasing neighborhood crime exemplifies what type of depreciation?
A.  Economic obsolescence
B.  Functional obsolescence
C.  Physical deterioration
D.  Unstable deterioration

Answer 5

A

Question 6

What is the practice called when a real estate agent only shows Hispanicbuyers properties in Hispanic neighborhoods?
A.  Redlining
B.  Steering
C.  Blockbusting
D.  Conversion

Answer 6

B

Agents are not allowed to “steer” buyers away from neighborhoods based on the FHA protected class

Question 7

Excessive lending activity for the purpose of generating fees and commissions is called:

a. Churning
b. Chunking
c. Property flipping
d. Equity skimming

Answer 7

A

Churning

Question 8

When is it legal and/or acceptable for the loan originator to provide the consumer with a copy of his/her credit report?

• Never
• When the customer pays for it
• When the customer requests it
• When contracts with the credit reporting agency do not prohibit it

Answer 8

When contracts with the credit reporting agency do not prohibit it