Ethics Flashcards
Mortgage broker Dave knew that his customer worked at a factory that was two weeks away from closing, but in his eagerness to close the deal, he decided to ignore that fact. This might be considered an example of
actual fraud.
What is the primary purpose of the Fair and Accurate Credit Transactions Act?
protect consumers from identity theft
In compliance with the Fannie Mae Selling Guide, which statement is FALSE as it relates to the persons who must sign a security instrument?
Only persons who have an ownership interest in the security property and also have his/her income used in qualifying for the mortgage must sign.
Mortgage loan processor Lisa distributes a company business card with her name on it along with the unique identifier of the mortgage lender she works for. Lisa hand writes a message on the card that states, “I can help you get a loan.” Lisa is
committing a prohibited act of misrepresentation in advertising which is a violation.
Alexa’s loan applicant calls her late in the evening before the closing, informing her he is being laid off the following Monday. All the loan papers are at the title company and the Closing Disclosure is approved. The buyer still wants the home. Alexa decides to let the loan close. What type of fraud is this?
material omission
To provide a revised Loan Estimate that can be used in determining good faith, a changed circumstance can be any of the following EXCEPT
the MLO neglected to inform the borrower and include the additional cost necessitated by a review appraisal.
For conventional lending, MLO Mandy can tell applicant Aiden that a gift can be provided by any of the following EXCEPT a(n)
real estate salesperson affiliated with the transaction.
If expired mortgage loan files for borrowers are disposed of in a dumpster at the back of the company’s office, the company has violated the consumer-protection requirements set forth by
FACTA.
A consumer reporting agency (CRA) must disclose to the consumer the recipients of a consumer’s credit report which it has furnished for a purpose other than for employment within the _____-month period preceding the request.
6
The Fannie Mae Selling Guide sets forth requirements for the use of a power of attorney (POA) in obtaining required signatures on a security instrument. Which of the following does NOT accurately reflect a requirement for the use of a POA in most circumstances involved with security instrument signatures?
A lender, who is not a relative of the borrower, may be used as the POA signer on a security instrument.
As set forth by the Telemarketing Sales Rule, when required advertising disclosures are oral, clear, and conspicuous means all of the following EXCEPT
Within a reasonable time frame
As mortgage broker Sam puts together an ad to attract some new customers, he should follow the requirements of what law to ensure his ad is not misleading or deceptive?
TILA
Mortgage broker Helen places an ad indicating a 5% interest rate for qualified applicants. Marshall meets the criteria to qualify at that rate, but Helen talks him into a less appropriate product, which results in a higher fee for her. This is an example of what sort of prohibited advertising tactic?
Bait and switch
MLO Brady failed to disclose a loan’s prepayment penalty to a consumer in a local publication. This BEST describes an example of
Misleading advertising
Mortgage companies need to establish internal policies that comply with the Telemarketing Sales Rule. Internal compliance policy can allow an MLO to call a consumer that makes an inquiry or submits an application to the company for up to ____ month(s) from the inquiry/application date.
3
Broker Tom advertises low interest rates and includes the accurate APR. However, when qualified applicants come in, Tom tells them that the smarter loan for them would be one with a slightly higher rate and more fees. If the loan does not offer more benefits than the one advertised, did Tom do anything wrong?
Yes, Tom could be accused of using a bait and switch tactic to earn more
Mortgage companies need to establish internal policies that comply with the Telemarketing Sales Rule. If a customer’s name is on the National Do Not Call Registry and that customer closes a loan with the company, the company must stop contacting the customer to solicit new business
After 18 months
A claim in any medium that gives the consumer an incorrect understanding of the service or product he is interested in obtaining BEST defines the term
Misleading advertising
The unlawful act of steering is
Channeling buyers to or away from certain neighborhoods based on their race or ethnic background
According to the Fair Housing Act, the Equal Housing Opportunity logo must be used in all advertising of
Residential real estate for sale, rent, or financing
The Fair Housing Act requires what to be posted in all institutions where mortgage loans are made?
Equal Housing Opportunity house logo
The Fair Housing Act requires the use of what slogan by creditors in all broadcast advertising?
Equal housing lender
When a lender’s advertisement offers a certain product, service, or loan, the product, service or loan must be made available
To a reasonable amount of qualified applicants
A for-profit MLO who claims to be a “counselor” in an ad about loan modification is in violation of what law?
Truth in Lending Act
Bait-and-switch advertising is BEST described as advertising
A “No points” loan to entice borrowers but not having the intention of actually offering it
The Fair Housing Act does NOT require that the Equal Housing Opportunity logo be displayed on
The Closing Disclosure
XYZ Mortgage Company makes a loan to Jaya knowing that she is unlikely to be able to repay it and anticipating that they’ll eventually foreclose and obtain some equity. This is an example of
Predatory lending
Cory is planning to purchase his first home and his real estate agent said that he must use a specific lender or else face having his loan denied due to his shaky credit record. Is this a legal practice?
No, it is illegal to steer a buyer to a lender with the impression that using the lender is required
When a Loan Estimate is provided to a borrower, it will be considered to have been provided in good faith if the actual closing costs are lower as shown on the borrower’s
Closing Disclosure
______ is the making of loans that take advantage of poorly informed consumers through excessively high fees, misrepresentation of loan terms, and frequent refinancing that does not benefit the borrower.
Predatory lending
If a consumer feels she has been discriminated against based on membership in a protected class under the Equal Credit Opportunity Act, she can go to the _____ to file a complaint.
CFPB or appropriate state civil agency as directed
Mortgage broker Bran is working with customer Arya. Bran recommends that she get a thorough home inspection and recommends Winter Inspections. Do you think that Bran can ethically and legally accept a $50 referral fee from Winter Inspections if Arya hires them?
No, a mortgage broker can never accept a fee or rebate for unearned settlement expenditures by his customer
The Fresh Start Company is anxious to work with homeowner, Julia, to obtain a loan modification that will help her avoid foreclosure. Fresh Start asks Julia for an advance fee to start the process. Fresh Start has violated the _____ with this advance fees request.
MARS Rule
As protection against predatory lending practices, the Home Ownership and Equity Protection Act places limitations on ______that may lock consumers into loans that may not be, or are no longer, in their best interest.
Prepayment penalties
For a Loan Estimate to be seen as provided in good faith, what cost cannot change from the Loan Estimate to the Closing Disclosure?
Application fee paid to lender
If a consumer feels he has been discriminated against under the Fair Housing Act, he has ____ year to go to ____ to file a complaint.
1 year, Department of Housing and Urban Development
Which is an example of steering?
Property manager Teri suggests Tim would be happier in a more diverse community
To comply with Regulation Z, lenders have an ethical and legal responsibility to disclose the ______ on the Loan Estimate.
Annual percentage rate
Fair lending and housing laws set forth requirements that ensure lenders treat applicants fairly and equally. Under laws related to fair lending and fair housing, which is legal?
Disregarding income that cannot be verified
Which is LEAST likely to be an indicator of predatory lending?
Requiring mortgage insurance
Sue faces possible foreclosure and contacts a mortgage lender whose ad promises to save her home for her. At closing, Sue sees that the lender changed the terms of the loan that they had agreed to, but she felt she had no choice but to go ahead with the loan or lose her house. This is an example of
Predatory lending
According to the Interagency Guidance on Nontraditional Mortgage Products, inducing a borrower to repeatedly refinance a loan in order to charge points and fees, although a net tangible benefit could have been achieved in a single transaction is an example of predatory lending. This predatory practice is commonly known as illegal
Loan flipping
As set forth by the FCRA, creditors who furnish information about consumers to consumer reporting agencies must correct, delete, or verify information within ____ days of receipt of a dispute.
30
Before an MLO can send documents to a customer electronically, permission must be obtained by the customer. Which of the following is the MOST acceptable method/s for obtaining consent and confirmation that a customer can access electronic documents?
By the electronic method for which the consumer will access documents
Mortgage companies are required to report any attempted fraud that occurs within their organization. Attempted fraud is reported by submitting a ______ to the Federal Financial Institution Examination Council (FFIEC). These reports are then reviewed and the information is reported to the institution’s regulator.
Suspicious Activity Report (SAR)
The compliance officer at a mortgage company must file a SAR when he observes electronic funds transfer transactions aggregating _____ or more that involve potential money laundering or violations of the Bank Secrecy Act.
$5,000
Vincent Collins is head of The Family Mortgage Corp. Two of his sons, Michael and Sonny work for the business as licensed mortgage loan originators. His third son, Fred, is not licensed and processes loans for the business. Which of the following would be illegal for Fred to do?
Advise a borrower who applied for a loan to get a fixed rate loan rather than an ARM
Which of the following must NOT specifically be considered as part of the underwriting analysis for a mortgage loan?
What is the history of the performance of properties sold in this geographic area
A consumer wants to file a complaint against XYZ Mortgage Company specific to the inaccuracy of fees provided via the Loan Estimate and Closing Disclosure. With what federal entity could this complaint be filed?
Consumer Financial Protection Bureau
If a consumer thinks his identity has been stolen, he may want to place a temporary freeze on his credit report. What is the maximum fee that a CRA may charge a consumer for placing a freeze on the consumer’s credit file?
$0
A consumer reporting agency that receives a request accompanied by proper identification must place a security freeze on the consumer credit report no later than ______ business day(s) after receiving such request.
1
