An MLO discovers that a competitor is offering borrowers cash payments outside of closing to choose their company over others. The MLO's manager suggests they should start offering similar incentives to remain competitive. What should the MLO do?
Correct Answer
C) Refuse to participate in such practices as they likely violate RESPA
Cash payments to borrowers for choosing a particular lender likely violate RESPA's anti-kickback provisions. MLOs must refuse to participate in potentially illegal practices regardless of competitive pressure or management direction.
Why This Is the Correct Answer
Cash payments to borrowers for choosing a particular lender likely violate RESPA's anti-kickback provisions. MLOs must refuse to participate in potentially illegal practices regardless of competitive pressure or management direction.
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 realizes they made an error in calculating a borrower's qualifying income, resulting in approval for a loan amount higher than what the borrower can actually afford. The error is discovered after closing. What should the MLO do?
Next Question
A borrower provides a verification of rent form signed by their landlord, but the MLO discovers through public records that the borrower actually owns the property being rented. This situation represents: