An MLO owns a 15% stake in a title company. When originating loans, what must the MLO do regarding this ownership interest?
Correct Answer
C) Provide written disclosure of the ownership interest to borrowers
Under RESPA Section 8, any ownership interest in a settlement service provider must be disclosed in writing to borrowers. There is no minimum threshold - any ownership interest creates a potential conflict that must be disclosed.
Why This Is the Correct Answer
Under RESPA Section 8, any ownership interest in a settlement service provider must be disclosed in writing to borrowers. There is no minimum threshold - any ownership interest creates a potential conflict that must be disclosed.
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 discovers that a borrower has overstated their income on the loan application after the loan has been approved but before closing. The MLO's ethical obligation is to:
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A mortgage company's website features a testimonial from a customer stating 'I saved $500 per month!' without any context about the customer's specific situation. This practice is: