ETHICS

Question 1

A potential borrower calls you for rates and programs. Assume they are on the DNC registry. You are allowed to call them back for what period of time?

Answer 1

3 months

Question 2

A potential client is shopping around for a competitive rate and a 15 day lead time to close. the brokerage you work for offers highly competitive rates, has an average lead to close time of 30 days, and a fast lead to close time of 21 days. Understanding these figures, you tell the client you can meet their demands and secure their business. This action is…

Answer 2

legal but unethical

Question 3

A transaction where the buyers have signed a contract to purchase real property, but have the intention of immediately selling it to another buyer can be a sign of?

Answer 3

Illegal property flipping

Question 4

You have been working with a client for the past 6 months who has finally been approved by the lender and is ready to close. Two days before closing, interest rates drop and you explain to your customer that you are unable to go with a different lender at a better rate because of the standing commitment to the current lender. After explaining the situation, your client still chooses to back out of the loan and go with a different loan officer. your client’s action in this situation is…

Answer 4

legal but unethical

Question 5

An investor is pitching the sale of properties as opportunities to new real estate investors, promising improbably high returns and loan risks, this could be considered:

Answer 5

Chunking - chunking is the sale of properties at artificially inflated prices.

Question 6

Your borrower has a joint-asset account with another person. most of the money in the account belongs to the non-borrower. The lender requires two months of bank statements. Under this circumstance, the documentation needed by the lender requires you to do what regarding deposits?

Answer 6

Disclose and document deposits for the borrower and non-borrower.

Question 7

You have completed the necessary pre-licensing education, testing, and application requirements to obtain your mortgage license. You have been hired by a brokerage and expect your background check to clear shortly. You have a friend who is eager to proceed with a loan application and your manager at the brokerage has said that you can start the file under his/her name, then switch it back to your name once your license arrives. This action is…

Answer 7

Illegal and unethical - this is considered unlicensed activity under the SAFE Act. your manager would also be in trouble for aiding and abetting your unlicensed activity.

Question 8

You are working with a customer who has disclosed they have new payment obligations that do not appear on their credit report. You realize that your customer qualifies for a loan based on figures calculated using only payment obligations reported on their credit. In order to ensure your client qualifies, you decide to exclude the payment obligations that do not appear on the credit report. This action is…

Answer 8

illegal and unethical - misrepresentation

Question 9

You pull credit on a husband and wife. It turns out their debt-to-income ratio is too high. You notice the majority of the debs belongs to the husband. You also note that the wife has enough income to qualify on her own. You remove the husband from the loan, with permission from the borrower, submit the file, and receive approval. This action is:

Answer 9

legal and ethical (except for communal property sales)

Question 10

You just closed a loan with a customer and would like to take them out to dinner to celebrate their new home purchase. Midway through the meal, you realize paying for your client’s meals may be a considered a violation of RESPA. You should:

Answer 10

Proceed - it is okay to pay for their meal. This is not a violation of respa because it is not a thank you for referrals or an anticipation of referrals.

Question 11

A borrower wants to purchase a second home and tells you that they intend to rent the property out when they are not living in it. You have reviewed their financial information and realize that the borrower would qualify for financing if the property is classified as a second residence. however, if the property is classified as an investment property, the borrower is unlikely to qualify. What should you do?

Answer 11

Classify the property as a rental property even though the borrower intends to reside there part of the year.

Question 12

Considering the legislation of the Secure and Fair Enforcement Act of 2008, originating a loan for a family member or other blood relation is considered…

Answer 12

legal and ethical

Question 13

You have a customer who has been approved by the lender and is ready to close. The customer backs out at the last minute because of a recent interest rate drop and opts to go with a different loan officer. You paid for the appraisal and want to invoice the customer and be reimbursed. This course of action would be considered…

Answer 13

Legal and ethical - it is legal for you to recoup third party fees that you’ve paid if the loan does not close because of the customer.

Question 14

A credit card company has a written policy that anyone between the age of 21-27 can only have a credit limit of $1000 and anyone over 30 automatically gets a credit limit of $5,000. This is an example of…

Answer 14

Overt discrimination

Question 15

What rule makes it illegal to charge upfront fees and requires disclosures in ads for mortgage assistance relief providers?

Answer 15

The MARS Rule - Mortgage Assistance Relief Services Rule

Question 16

A borrower is looking to purchase a new home, this new home is smaller than their current home and less expensive. They tell the MLO that they intend to sell their current home once they’ve gotten a new home. The borrower closes on their new home and promptly defaults on their old home. This is called:

Answer 16

Buy and Bail

Question 17

A history showing the title changes regarding a property is required by an underwriter for what purpose?

Answer 17

To verify the absence of property flipping

Question 18

If fraud is discovered by the servicer, what can happen?

Answer 18

The originating lender returns any premium fees
buy back
calling the note due

Question 19

When is a loan officer authorized to refuse to accept a loan application?

Answer 19

When the information supplied by the applicant appears fraudulent.

Question 20

A lender has a minimum loan amount that they will lend on, that minimum loan amount is $150,000. The average home value to a minority in the neighborhood is $100,000, so the lender does not help anyone in that minority area. this would be…

Answer 20

Disparate impact - occurs when a facially neutral policy is applied equally to all applicants, but the policy or practice disproportionately excludes or burdens certain groups of people on a prohibited basis.

Question 21

You interview a customer and collect all the information needed to fill out the 1003 and run credit. Before running credit, you specifically ask the client if it is okay to run their credit, and they consent. You should now…

Answer 21

Have the customer sign a borrower’s authorization form and then pull credit.

Question 22

Your customer calls you in the morning and tells you to lock the interest rate at 5.5% you initially disclosed. You commit to lock the rate, but your day becomes busy and you aren’t able to lock it until later in the day. When you go to lock the rate, you notice that the pricing has changed since this morning and the rate of the 5.5% is now going to cost an additional $500. What is the most appropriate course of action?

Answer 22

Pay the $500 and lock the rate. This would be a cost that would be covered by the lender as it was not the borrower’s fault you became busy.

Question 23

You are working on a file referred to you by a realtor. The realtor calls you to see if there is going to be any problem getting the customer qualified. The realtor wants to know what the borrower’s credit scores are before presenting the offer. The most appropriate course of action is…

Answer 23

Refer the realtor to the borrower - you cannot provide personal information of the borrower to anyone, including the realtor without the borrower’s permission. It’s always the best course of action to point the realtor to their client.

Question 24

On a federal residential loan application, you initially disclose a rate of 5% to the customer but are floating the rate. Over the next few days, rates improve and you have the option to lock the rate in at 4.75% and earn the same compensation. This behavior would be considered:

Answer 24

Legal and ethical

Question 25

An MLO leaves a borrower’s file open on his/her desk for just a moment. an identity thief sees the borrower’s credit report which contains a huge amount of information. Fortunately the MLO quickly returns. What potential federal laws is the MLO violating

Answer 25

FACTA and GLBA