An MLO discovers their employer is systematically charging higher rates to minority borrowers. The MLO's appropriate response is to:
Correct Answer
B) Report the discriminatory practices to appropriate authorities
Discriminatory pricing based on protected characteristics violates fair lending laws. MLOs have an ethical and legal obligation to report such practices to regulators, as continuing to participate could make them liable for discrimination.
Why This Is the Correct Answer
Discriminatory pricing based on protected characteristics violates fair lending laws. MLOs have an ethical and legal obligation to report such practices to regulators, as continuing to participate could make them liable for discrimination.
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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A borrower refinances their mortgage four times in two years, each time with higher fees and closing costs totaling $15,000, but with no significant benefit such as rate reduction or cash out. The loan originator generated substantial commission income from these transactions. This pattern suggests:
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An appraiser uses comparable sales from 18 months ago in a rapidly declining market instead of recent sales. The resulting appraisal is 25% higher than current market value. This suggests: