A quality-control reviewer flags a case because a borrower asks whether the company will file a suspicious activity report. What correction is appropriate?
Correct Answer
D) Do not tell the borrower that a SAR may be filed
Why this is correct: The correction must align with the SAR confidentiality requirement. The rule prohibits disclosing SAR filing information to the subject. Therefore, the appropriate action is to ensure no one tells the borrower a SAR may be filed. Why the other choices are wrong: "Treat the rule as waived because all parties want the file to move faster" is wrong because regulatory requirements cannot be waived by mutual agreement. "Assume another jurisdiction approval automatically cures this file" is wrong because SAR rules are federal and not superseded by state or other approvals. "Handle records, reports, and required notices with a sales script rather than the required file action" is wrong because a sales script cannot replace the mandatory legal action of maintaining SAR confidentiality. Exam tip: In quality control, flag any communication that risks SAR confidentiality. The fix is always to stop the disclosure.
Why This Is the Correct Answer
The correct response is "Do not tell the borrower that a SAR may be filed". SAR rules include confidentiality; the borrower should not be tipped off about a SAR filing or potential filing.
Why the Other Options Are Wrong
Option A: Treat the rule as waived because all parties want the file to move faster.
Treat the rule as waived because all parties want the file to move faster. is not correct because it bypasses the rule supported by the explanation.
Option B: Assume another jurisdiction approval automatically cures this file.
Assume another jurisdiction approval automatically cures this file. is not correct because it bypasses the rule supported by the explanation.
Option C: Handle records, reports, and required notices with a sales script rather than the required file action.
Handle records, reports, and required notices with a sales script rather than the required file action. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
For SAR questions, no tipping is almost always the tested ethics point.
Exam Tip
For SAR questions, no tipping is almost always the tested ethics point.
Common Mistakes to Avoid
- -Customer service transparency does not include disclosing SAR activity to the subject.
More Ethics & Fraud Questions
In a file escalation meeting, the supervisor sees facts tied to RESPA Kickbacks and Referrals. What should the file reflect?
In a closing-readiness check, a disclosure specialist sees facts tied to Appraisal Fraud Detection. What should the file reflect?
At closing, an MLO adds a single-premium credit-life policy to the loan amount even though the borrower declined it and the policy is not required for approval. Which practice is the clearest concern?
A refinance eliminates a borrower's fixed-rate loan, adds substantial fees, provides no cash or lower payment, and restarts a 30-year term. What should the MLO do before recommending it?
An applicant has verified monthly income of $5,000 and monthly obligations of $4,700 after the proposed mortgage payment. The applicant expects an undocumented raise next year. What should the MLO do?
A lender bases approval entirely on the home's high appraised value and does not verify the borrower's income or existing debts. What is the central compliance concern?
A borrower agrees to a mortgage but declines an optional home-warranty plan. The final loan documents nevertheless finance a $2,400 warranty premium. What should the MLO do?
An MLO recommends a loan with a low initial payment that will increase sharply in two years. The borrower says retirement income will be fixed and asks whether the payment can change. What is the appropriate response?
To obtain approval, an MLO changes a self-employed applicant's verified monthly income from $6,000 to $9,000 without supporting documentation. How should this conduct be characterized?
A homeowner is encouraged to refinance for the third time in 18 months. Each loan generates new points and fees, while the borrower's payment and rate do not improve. Which practice is most strongly indicated?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Uniform State Test Content
11% of exam