Ethics

Which of the following statements would be permissible when communicating with an appraiser?

"Can you explain why this property is value so low, compared to the current market?"

Mike Maxwell is a small business owner who is applying for a refinance on his home. During the loan application interview, he asks how much income he needs to show in order to qualify for the loan. What is the most ethical response?

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

A "straw buyer" is:

A buyer who accepts a fee for the use of his or her Social Security Number and other personal information on a mortgage application

According to federal fair lending laws, which of the following cannot be considered when qualifying an applicant for a loan?

A female applicant is four months pregnant and might not continue working once her baby is born

Which of the following describes an air loan?

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

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

A fiduciary duty

Which of the following constitutes a "thing of value" that would violate RESPA?

A loan originator gives an airline travel voucher to an attorney for introducing a customer

Property flipping occurs when:

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

Prior to recent regulatory changes, "yield spread premium" was traditionally defined as:

An amount paid by the lender to a third party originator for locking a borrower's interest rate at a rate higher than that for which he or she qualifies

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

An open-end HELOC

A hazard insurance company hosts a dinner for the employees of a mortgage broker. The designated broker encourages the employees to send clients to the insurance company. Who has violated RESPA?

Both the hazard insurance company and the mortgage broker

A title insurance company provides a computer to a mortgage broker. The computer is used to transmit electronic documents from the mortgage broker's office to the title insurance company. Who is in violation of RESPA?

Both the title insurance company and the mortgage broker

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?

Equity-based lending

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?

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

The Government National Mortgage Association is also known as ______ or ______.

Ginnie Mae; GNMA

Even before the adoption of the Dodd-Frank Act and the Ability to Repay Rule, which of the following federal laws created specific requirements for the verifications and documentation of a borrower's repayment ability?

Home Ownership and Equity Protection Act

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

Imposed by state licensing laws in some states

A Supreme Court decision has held that:

Markups are not illegal unless they are split

Michael purchased a luxury home in 2006 using funds secured through a stated-income loan. In 2008, the IRS audited him, and began to suspect mortgage fraud upon discovering that he never earned enough to qualify for a loan to buy his expensive home. Using an undercover agent, the IRS recorded Michael admitting that he had used a "liar loan" to purchase his home. Having obtained this information, the IRS:

May refer Michael's file to law enforcement authorities for an action for mortgage fraud

When Michael wanted to purchase a home in 2006, his mortgage broker told him that his income was insufficient to qualify for the mortgage. When Michael insisted on trying to purchase the home, his mortgage broker suggested that he complete an application for a stated-income loan, and told him the minimum income level that he needed to include on the application in order to qualify for a mortgage. Michael completed the loan application, adding $20,000 to the minimum amount that his broker suggested. The broker reviewed the application and Michael signed it. Which of the following statements most accurately describes the liability that can arise from this scenario?

Michael and the mortgage broker are liable for submitting a loan application that contains false information

A mortgage broker enters into a rental agreement with a real estate agent where the rent for the office space is at the prevailing market price. Wh has violated RESPA?

Neither the mortgage broker nor the real estate agent

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

Neither the real estate company nor the mortgage company

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

Neither the real estate company nor the title company

A mortgage broker has 49% ownership in a title company. The mortgage broker refers business to the title company and also provides written disclosures to the borrower detailing the business relationship. The written disclosures also makes it clear that the borrower is not required to use the services of the title company. Who is in violation of RESPA?

Neither the title company nor the mortgage broker

An advertisement that states, "Refinance and we can save you up to $300 per month!" is:

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

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

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

A mortgage broker is unable to assist a client and refers him to another mortgage broker for origination services. The second broker pays the referring broker a fee for providing the lead. Which of the following is correct?

Payment of the fee is illegal

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

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

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

Regulation Z

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

Regulation Z

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

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

Cindy is a loan originator who specializes in refinances. A local appraiser calls her and promises to deliver any appraisal that she needs for her refinances, telling Cindy, "All you have to do is let me know the valuations that you need!" What are Cindy's obligations under the appraisal rules?

She must report the actions of the appraiser to the state appraiser and licensing authorities and submit a request for a new appraisal

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

The Safeguards Rule

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

The applicant is too young to enter into a contract

In which of the following cases would it be permissible for a mortgage professional to withhold compensation to an appraiser?

The appraiser has provided valuations that used inappropriate comparables, included errors, and were generally inaccurate

For which of the following reasons would it be permissible to refuse to take an application from a potential borrower?

The borrower has alluded to the fact that she is submitting false documents in order to qualify for a larger loan

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

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

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

The real estate licensee

It is unethical and illegal to use yield spread premiums for any reason other than:

To help a borrower pay for settlement costs

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

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