Ethics

Question 1

A mortgage loan originator has a 40% ownership of a survey company. The mortgage broker refers business to the survey company and provides a written disclosure (CBA), prior to the time of referral, to the borrower of their business relationship. The written disclosure also makes it clear that the borrower is not required to use the services of the survey company. Who is in violation of RESPA section 8?

Answer 1

Neither the mortgage broker nor the survey company.

Question 2

Section 8 of RESPA defines an “agreement or understanding” for the referral of business incident to or part of a settlement service as:

Answer 2

anything of value that is received repeatedly and is connected in any way with the volume or value of the business referred.

Question 3

An attorney and a residential mortgage loan originator (RMLO) enter into an agreement in which the attorney’s country club membership dues are paid by the RMLO each month in return for the referral of prospective loan applicants. Who is in violation of RESPA Section 8?

Answer 3

Both the RMLO & the Attorney

Question 4

A mortgage loan originator advertises to a real estate office that after “three closings using their mortgage company,” the mortgage broker will give back a referral fee to the real estate brokerage. This referral fee is on a sliding scale based on the number of loans processed through that firm. According to the Real Estate Settlement Procedures Act, who has violated the prohibition regarding kickbacks?

Answer 4

The Mortgage Loan Originator

Question 5

A loan originator’s company policy requires that each transaction earn $3,000 in branch fees. The originator recently closed and funded a loan for a relative. The loan amount was $250,000. The originator collected fees of $750 only. According to the information given and the ECOA, the loan originator acted:

Answer 5

Legally/Unethically.

Question 6

Paul has an unacceptable credit history and credit score. To obtain a home, Paul arranges for his brother Jon, who has an outstanding credit history and score, to apply for a mortgage loan for Paul’s benefit. Jon has no intention of occupying the property and fully understands that his non-qualifying sibling will occupy the property. This, according to the FBI, is an example of what type of mortgage fraud scheme?

Answer 6

Straw Buyer

Question 7

What Federal Law protects the privacy of the consumer and requires a loan originator to provide a clear, conspicuous, and accurate statement of the company’s privacy practices?

Answer 7

Gramm-Leach-Bliley Act

Question 8

Property flipping occurs when:

Answer 8

A property is acquired and resold at a much higher price within a short period of time.

Question 9

According to fair lending laws, age may be considered a factor in denying a loan application if:

Answer 9

The applicant is too young to enter a binding contract.

Question 10

Which of the following actions by a loan originator would be a violation of the Equal Credit Opportunity Act (ECOA)?

Answer 10

Not considering income offered by the applicant that is obtained from a public assistance program

Question 11

The illegal disparate treatment in which a lender provides unequal access to credit, or unequal terms of credit, because of race, color, national origin, or other prohibited characteristics of the reside

Answer 11

Redlining

Question 12

The Fraud Enforcement and Recovery Act (FERA) was signed into law by President Barack Obama in May 2009. It increased the penalties for a federal conviction for mortgage fraud to a maximum of:

Answer 12

30 years in federal prison or $1,000,000 fine, or both.

Question 13

A loan originator has received an application for a purchase of an owner-occupied property. Which of the following might indicate that the applicant’s real intent is to acquire the property for rental purposes?

Answer 13

The applicant’s place of employment is in another state.

Question 14

Sexual orientation discrimination and gender identity discrimination are violations of the _____.

Answer 14

ECOA

Question 15

A consumer requests the name of a good attorney from a residential mortgage loan originator (RMLO). The RMLO provides a list of three attorneys they have conducted business with in the past. The RMLO does not have an affiliated relationship or a direct or beneficial ownership relationship with any of the attorneys. When, according to RESPA, must the RMLO provide the Affiliated Business Arrangement Disclosure to the consumer?

Answer 15

The RMLO is not required to give a disclosure if they have no interest in any of the referred parties

Question 16

A mortgage professional who violates the RESPA prohibition on referral fees is subject to:

Answer 16

Fines of $10,000 and up to one year in prison.

Question 17

When a mortgage professional orders an appraisal, which of the following is prohibited?

Answer 17

Requesting that the appraiser return a minimum value

Question 18

For a fee, a real estate licensee offers a mortgage company the names and telephone numbers of all the people who attended an open house. Who is in violation of RESPA?

Answer 18

The real estate licensee

Question 19

When a lender applies a policy or practice equally to credit applicants, but the policy or practice has a disproportionate adverse consequence on applicants from a group protected against discrimination, the policy or practice is described as:

Answer 19

disparate impact.

Question 20

A realtor has referred to you a buyer in need of a mortgage loan to purchase a property. During the loan application interview, the applicant asks, “How much additional income do I need to show in order to qualify for a 15-year fixed-rate mortgage?” What is the most ethical response?

Answer 20

Let’s review your tax returns and bank statements to determine your income.

Question 21

Which is permitted under RESPA and Regulation X for the referral of settlement business?

Answer 21

An employer’s payment to its own employees for any referral activities.