A lender's website features a mortgage calculator that consistently understates monthly payments by excluding certain fees that are always required. When borrowers apply, they receive accurate Loan Estimates with all fees properly disclosed. The lender argues the calculator is just a 'preliminary tool.' This practice is most likely:
Correct Answer
B) Deceptive because the calculator creates false expectations despite later accurate disclosures
Under UDAAP, this practice is likely deceptive because the calculator creates a misleading impression about loan costs, even though accurate information is provided later. The fact that consumers rely on calculators to make initial decisions makes the misleading nature material to their decision-making process.
Why This Is the Correct Answer
Under UDAAP, this practice is likely deceptive because the calculator creates a misleading impression about loan costs, even though accurate information is provided later. The fact that consumers rely on calculators to make initial decisions makes the misleading nature material to their decision-making process.
More Ethics & Fraud Questions
A lender's mobile app prominently displays a 'pre-qualification' feature that asks for minimal information but generates loan amount estimates that are consistently 20-30% higher than what borrowers actually qualify for when they complete full applications. The app includes a disclaimer that estimates are 'subject to full underwriting.' This practice is most likely:
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During a fair lending examination, regulators discover that a bank's loan officers receive higher commissions for loans with interest rates above 6%, and statistical analysis shows borrowers in predominantly minority neighborhoods receive these higher-rate loans more frequently. This compensation structure would MOST likely be viewed as:
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An MLO's advertisement includes the statement 'Payments as low as $500 per month.' What additional disclosures are required under TILA?
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An MLO's company has a policy requiring use of a specific credit reporting agency that provides volume discounts. A borrower asks to use a different credit agency. How should the MLO respond?
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A loan originator pressures an elderly borrower with limited English proficiency into a high-cost reverse mortgage by using complex terminology and refusing to provide translated documents, despite the borrower's requests. This scenario best illustrates which type of UDAAP violation?