An MLO discovers that his brother-in-law is applying for a mortgage loan at his company. What is the most appropriate action the MLO should take?
Correct Answer
B) Disclose the relationship to his supervisor and recuse himself from the loan process
Under SAFE Act requirements and general ethics principles, MLOs must avoid conflicts of interest. When a personal relationship exists, the MLO should disclose this to management and recuse themselves from the loan process to maintain objectivity and avoid potential conflicts.
Why This Is the Correct Answer
Under SAFE Act requirements and general ethics principles, MLOs must avoid conflicts of interest. When a personal relationship exists, the MLO should disclose this to management and recuse themselves from the loan process to maintain objectivity and avoid potential conflicts.
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:
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Previous Question
An MLO learns that a borrower who received a loan six months ago has been arrested for mortgage fraud in connection with loans at other institutions, but not involving the MLO's institution. The borrower's loan with the MLO's institution is performing normally. What is the SAR filing obligation?
Next Question
An MLO learns that a competing lender is offering significantly better terms to the same borrower. The MLO's lender cannot match these terms. What is the MLO's ethical obligation?