An MLO discovers that a borrower is his child's teacher. The borrower mentions struggling financially and hints that loan approval would be very helpful for the teacher's job security. What should the MLO do?
Correct Answer
D) Transfer the application to another MLO to avoid any conflicts
When personal relationships exist that could influence objective decision-making, the best practice is to transfer the application to another qualified MLO. This removes any appearance of favoritism or conflict of interest while ensuring the borrower receives fair treatment.
Why This Is the Correct Answer
When personal relationships exist that could influence objective decision-making, the best practice is to transfer the application to another qualified MLO. This removes any appearance of favoritism or conflict of interest while ensuring the borrower receives fair treatment.
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:
An MLO tells Asian applicants that they need larger down payments 'because that's what investors prefer for your type of loan,' while telling similarly qualified white applicants that standard down payments are acceptable. This practice represents:
A mortgage company advertises 'Guaranteed approval for all credit types!' but internally has minimum credit score requirements of 580. This advertisement is problematic because it:
People Also Study
Federal Mortgage-Related Laws
23% of exam
General Mortgage Knowledge
23% of exam
Mortgage Loan Origination Activities
25% of exam
Uniform State Test Content
12% of exam
Previous Question
A real estate agent, mortgage broker, and appraiser coordinate to help a first-time homebuyer qualify for a loan by slightly inflating the property value and the buyer's income. The buyer is unaware of these modifications and genuinely needs housing. This scenario represents:
Next Question
A mortgage company maintains an internal do-not-call list. How long must consumer requests to be placed on this list be honored?