MLO Domain 5: Ethics Welcome to your MLO Domain 5: Ethics 1. MLO: Ethics A Mortgage Loan Officer (MLO) discovers that a loan applicant has not disclosed a significant debt on their application. What should the MLO do? A. Proceed with the application as it is not the MLO's responsibility to investigate. B. Report the discrepancy to their supervisor for further review. C. Advise the applicant to omit the debt to increase the chances of loan approval. D. Offer the applicant a higher interest rate to compensate for the risk. None 2. MLO: Ethics If an MLO receives a gift from a real estate agent for referring clients, what is the most ethical action to take? A. Accept the gift as long as it's not cash. B. Decline the gift and report the offer to their supervisor. C. Accept the gift and disclose it to the clients referred. D. Negotiate for a higher value gift for future referrals. None 3. MLO: Ethics An MLO realizes that they accidentally provided misleading information about loan terms to a borrower. What is the next step? A. Correct the mistake and inform the borrower of the accurate terms. B. Ignore the mistake as correcting it might lose the client. C. Wait to see if the borrower notices the discrepancy. D. Advise the borrower to read the fine print carefully. None 4. MLO: Ethics When is it appropriate for an MLO to refuse to serve a client? A. When the client has a poor credit history. B. When serving the client would violate fair lending laws. C. If the client belongs to a certain race or ethnicity. D. If the client's loan amount is not high enough to be profitable. None 5. MLO: Ethics What should an MLO do if they suspect a co-worker is involved in fraudulent activities? A. Confront the co-worker directly and demand an explanation. B. Ignore it as it is not their responsibility. C. Report the suspicion to their supervisor or compliance department. D. Advise the co-worker on how to avoid getting caught in the future. None 6. MLO: Ethics An MLO is offered confidential information about a competitor's client list for a fee. What is the ethical response? A. Decline the offer and report it to their supervisor. B. Accept the information but do not pay the fee. C. Pay the fee and use the information discreetly. D. Negotiate the fee down before accepting the information. None 7. MLO: Ethics When processing a loan application, an MLO notices inconsistencies that suggest the applicant may be inflating their income. What is the most ethical action? A. Approve the loan to avoid confrontation with the applicant. B. Reject the loan application without further investigation. C. Investigate the inconsistencies and request clarification from the applicant. D. Suggest the applicant apply for a smaller loan amount. None 8. MLO: Ethics A loan applicant discloses they intend to use the loan for illegal activities. What should the MLO do? A. Proceed with the application as the MLO's role is not to enforce the law. B. Reject the application and report the conversation to their supervisor and possibly to legal authorities. C. Advise the applicant to not disclose this information in the future. D. Ignore the applicant's intentions as long as the loan meets underwriting criteria. None 9. MLO: Ethics If an MLO becomes aware that a client has been misled about loan terms by another officer within the same company, what is the ethical course of action? A. Correct the misinformation and inform the client about the accurate loan terms. B. Leave the situation as is to avoid internal conflict. C. Encourage the client to close the deal quickly before noticing the discrepancy. D. Blame the previous officer and promise better service to retain the client. None 10. MLO: Ethics An MLO receives a lucrative job offer from a competitor but is aware of confidential information about their current employer's clients. What is the ethical action regarding this information? A. Share the information with the new employer to secure the job. B. Keep the information confidential and not disclose it to the new employer. C. Use the information as leverage for a higher salary with the new employer. D. Delete the information to avoid ethical dilemmas. None 11. MLO: Ethics An MLO is reviewing a loan application from a close friend. The friend does not qualify for the preferred loan terms and asks the MLO to alter the application. What should the MLO do? A. Alter the application as requested to help the friend. B. Refuse to alter the application and explain the ethical obligations involved. C. Transfer the application to another MLO to avoid a conflict of interest. D. Approve the loan under the preferred terms without alterations. None 12. MLO: Ethics What should an MLO do if they find proprietary software from a competitor on their company's network? A. Use the software to gain a competitive advantage. B. Ignore the software as long as it benefits their company. C. Report the existence of the software to their supervisor. D. Copy the software for personal use before reporting it. None 13. MLO: Ethics An MLO discovers that a colleague has accepted a bribe to approve a loan that does not meet the institution's lending criteria. What is the most ethical course of action? A. Confront the colleague and demand they return the bribe. B. Ignore the situation since the loan has already been approved. C. Report the colleague's actions to the appropriate internal compliance or ethics department. D. Advise the colleague on how to avoid detection in the future. None 14. MLO: Ethics A borrower asks an MLO to omit their spouse's poor credit history to secure a better loan rate. What should the MLO do? A. Omit the spouse's credit history as requested to ensure customer satisfaction. B. Refuse to alter or omit any information and explain the importance of transparency. C. Suggest applying for the loan under a single name to bypass the issue. D. Inform the borrower that a higher rate could be negotiated instead. None 15. MLO: Ethics An MLO finds a loophole in the lending regulations that could potentially be exploited for profit. What is the most ethical action? A. Exploit the loophole for as long as it remains open. B. Report the loophole to regulatory authorities to help close it. C. Share the loophole with colleagues to maximize its benefit. D. Document the loophole but take no further action. None 16. MLO: Ethics During an audit, an MLO is asked to provide misleading information to the auditors. What is the ethical response? A. Provide the information requested to protect the company's interests. B. Refuse to provide misleading information and report the request to a higher authority. C. Suggest ways to present the information that could be technically true but misleading. D. Avoid direct answers to the auditors' questions to avoid lying. None 17. MLO: Ethics If an MLO is aware of another MLO engaging in discriminatory lending practices, what should they do? A. Ignore it as addressing it could create workplace tension. B. Report the behavior to ensure adherence to fair lending laws. C. Advise the offending MLO on how to hide their discriminatory practices. D. Confront the MLO privately and suggest they stop such practices. None 18. MLO: Ethics An MLO is offered insider information about a future regulatory change that will affect loan approvals. What is the most ethical action? A. Use the information to gain a competitive edge. B. Share the information with close clients to help them secure loans under current regulations. C. Report the offer of insider information to their supervisor or compliance department. D. Keep the information to themselves but use it to guide their loan approval decisions. None 19. MLO: Ethics An MLO is asked by their employer to endorse a particular loan product to clients, despite it not being in the best interest of most clients. What is the ethical action? A. Endorse the product to maintain job security and meet company goals. B. Refuse to endorse the product and explain the ethical dilemma to their employer. C. Endorse the product but subtly suggest alternatives to clients. D. Quit the job immediately to avoid ethical conflicts. None 20. MLO: Ethics During a loan application review, an MLO notices a small error that could lead to a lower interest rate for the borrower. What should the MLO do? A. Correct the error and notify the borrower of the change. B. Leave the error uncorrected to avoid additional paperwork. C. Correct the error but do not inform the borrower to avoid confusion. D. Use the error as leverage to encourage the borrower to take additional services. None 1 out of 20 Time is Up! Time's up
