A borrower asks an MLO to recommend a specific appraiser who they know will 'be flexible' with the property value. The MLO knows this appraiser has a reputation for inflated appraisals. What should the MLO do?
Correct Answer
B) Decline to recommend the appraiser and explain the importance of independent, accurate appraisals
MLOs have a fiduciary duty to act in the borrower's best interest and maintain the integrity of the lending process. Recommending an appraiser known for inflated valuations could constitute appraisal fraud and violates the MLO's ethical obligations under the SAFE Act to ensure honest dealing and avoid conflicts of interest.
Why This Is the Correct Answer
MLOs have a fiduciary duty to act in the borrower's best interest and maintain the integrity of the lending process. Recommending an appraiser known for inflated valuations could constitute appraisal fraud and violates the MLO's ethical obligations under the SAFE Act to ensure honest dealing and avoid conflicts of interest.
More Ethics & Fraud Questions
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Next Question
An MLO markets a 'government-backed' loan program to elderly borrowers, emphasizing government backing while downplaying that it's actually a reverse mortgage with significant fees and potential loss of home equity. The MLO provides all legally required reverse mortgage disclosures. Under UDAAP analysis, this marketing approach is: