Ethics
Ethics questions test professional conduct, fair dealing, and integrity. Understand the core duties: honesty and transparency with borrowers, confidentiality of nonpublic personal information (GLBA/Reg P), fair lending under ECOA and the Fair Housing Act, and avoiding conflicts of interest.
Know fraud and misrepresentation - both borrower fraud (false income, occupancy) and originator fraud (falsifying documents, straw buyers, inflated appraisals). Understand predatory lending indicators: steering to high-cost products, equity stripping, excessive fees, and pressure tactics. Know the duty to report suspected fraud and the anti-steering rules under Reg Z.
Understand advertising and solicitation ethics - no misleading claims, no false promises about approval, and no unauthorized use of government logos. Know the handling of borrower complaints and the importance of documenting communications.
Traps: questions that present a "gray area" where a shortcut benefits the originator - the correct answer is almost always the transparent, documented, borrower-first choice. Watch for scenarios testing whether you can accept gifts or referral fees (referral fees are prohibited under RESPA Section 8). Also watch for confidentiality breaches - sharing borrower data with unauthorized parties.
Rule of thumb: if an action would not survive being printed on the front page of a newspaper, it is the wrong answer.
Worked example: A realtor offers a loan officer $500 per referral. Accepting violates RESPA Section 8 (prohibited kickbacks) and is unethical regardless of disclosure - the correct response is to decline.