Ethics

Question 1

Advertising an attractive interest rate that a mortgage professional is not at liberty to offer is a major ethical offense and a violation of:

Answer 1

Regulation Z

Question 2

It is unethical and illegal to use yield spread premiums YSP (commissions that mortgage brokers obtained rom lenders for originating a loan with a an interest rate higher than the par rate) for any reason other than:

Answer 2

To help a borrower pay for settlement costs

Question 3

The Gramm-Leach-Bliley Act protects the privacy of nonpublic personal information using all of the following methods, except:

Answer 3

Requiring financial institutions, including mortgage companies, to obtain permission for the use and sharing of consumers’ nonpublic personal information

Question 4

Property flipping occurs when:

Answer 4

A property is bought and resold within a very short period of time

Question 5

A “straw buyer” is:

Answer 5

A buyer who accepts a fee for the use of his or her social security number and other personal information on a mortgage application.

Question 6

For a fee, a real estate licensee offers a mortgage company the names and telephone numbers of ll of the people who attended an open house, but the mortgage company does not accept the offer. Who is in violation of RESPA?

Answer 6

The real estate licensee

Question 7

A title company advertises in a real estate company’s publication by paying the required fees. Who is in violation of RESPA?

Answer 7

Neither the real estate company nor the title company.

Question 8

A real estate company accepted flyers from a mortgage company and made them available to prospective buyers during an open house. Who has violated RESPA?

Answer 8

Neither

Question 9

Which of the following compensation practices is allowed under the Loan Originator Compensation Rule?

Answer 9

Paying all originators a 3% commission for every loan originated, regardless of the loan amount or the terms and conditions of the loan

Question 10

Which of the following transactions would be exempt from the ATR Rule?

Answer 10

An open-end HELOC

Question 11

Which of the following requires mortgage professionals to implement and maintain security protocols to ensure the confidentiality of consumer information?

Answer 11

The Safeguards Rule

Question 12

Which of the following mortgage broker policies would violate fair lending laws?

Answer 12

Refusing to originate loans in ZIP codes known to be economically depressed

Question 13

Basing a loan approval on only the appraised value of a borrower’s collateral and failing to consider repayment ability constitutes which of the following ethical violations?

Answer 13

Equity-based lending

Question 14

It is permissible for loan processors to:

Answer 14

Contact loan applicants in order to obtain information needed to process a loan.

Question 15

Advertising an attractive interest rate that a mortgage professional is not at liberty to offer is a major ethical offense and a violation of:

Answer 15

Regulation Z

Question 16

In states with an agency requirement, which of the following practices could violate a mortgage broker’s duty to serve as a borrower’s fiduciary?

Answer 16

Failing to submit an FHA loan application at the borrower’s request

Question 17

A mortgage broker is required to provide an opt-out notice in which of the following cases?

Answer 17

The mortgage broker shares nonpublic personal information with non-affiliated third parties

Question 18

If a mortgage broker were to take on the role of a borrower’s agent, the mortgage professional is said to have:

Answer 18

A fiduciary duty

Question 19

Which of the following describe an air loan?

Answer 19

A fictitious borrower obtains a mortgage and secures it with fictitious property

Question 20

Which of the following statements offers the most accurate description of the effect of using a “trigger term” in an advertisement for a loan?

Answer 20

Use of a trigger term requires the clear and conspicuous disclosure of other relevant terms with equal prominence.

Question 21

An advertisement that states “REfinance and we can save you up to $300 per month!” is:

Answer 21

Not a violation of TILA if it provides information on APRs and payments with equal prominence, as long as the statement is true

Question 22

The obligation for mortgage brokers to serve as the agent or the fiduciary of borrowers is:

Answer 22

Imposed by state licensing laws in some states

Question 23

This 2009 federal law was put in place to establish increased enforcement of anti-mortgage fraud laws.

Answer 23

The Fraud Enforcement and Recovery Act