An MLO discovers a borrower has refinanced with three different lenders in the past two years, each time increasing the loan balance and paying substantial fees. The borrower mentions they were told each refinance would 'improve their financial situation.' The MLO's appropriate response should be:
Correct Answer
B) Decline to participate in potential loan flipping pattern
The MLO should recognize this pattern as potential loan flipping and decline to participate. Contributing to a pattern of refinancing that primarily generates fees without meaningful borrower benefit would constitute participating in predatory lending practices, regardless of the MLO's intent to help.
Why This Is the Correct Answer
The MLO should recognize this pattern as potential loan flipping and decline to participate. Contributing to a pattern of refinancing that primarily generates fees without meaningful borrower benefit would constitute participating in predatory lending practices, regardless of the MLO's intent to help.
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:
An MLO discovers that multiple loan applications from different borrowers contain identical handwriting in the signature sections, despite different purported signers. The applications were submitted by different real estate agents. What is the most appropriate immediate action?
A mortgage loan originator receives a lead from a real estate agent about a potential borrower. Before calling this consumer, the MLO must:
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Previous Question
An MLO discovers that multiple loan applications from different borrowers contain identical handwriting in the signature sections, despite different purported signers. The applications were submitted by different real estate agents. What is the most appropriate immediate action?
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Under the ECOA Valuations Rule, if a lender takes adverse action on a credit application, the applicant must receive a copy of any appraisal within: