Ethics
This domain tests conduct: SAFE Act licensing duties, fair lending, fraud prevention, confidentiality, and advertising. Items are scenario-based - you are asked what a licensed originator must do, not what is convenient for the deal.
Licensing duties
Maintain an active license through NMLS, display the unique identifier on advertising and business cards, complete eight hours of annual continuing education (including ethics and federal law), and never originate for an unlicensed entity. Maryland layers its own Mortgage Lender Law and Commissioner of Financial Regulation requirements on top of the federal SAFE framework.
Prohibited conduct
Kickbacks and unearned fees; steering a borrower into a costlier loan to increase compensation; inflating income or assets on the 1003; pressuring an appraiser; discriminating on a prohibited basis; disclosing borrower information without authorization under GLBA.
Fair lending
Prohibited bases under ECOA and the Fair Housing Act include race, color, religion, national origin, sex, familial status, disability, age, marital status, and receipt of public assistance. Overt discrimination, steering, redlining, and disparate-impact practices all violate the law.
Worked example. A realtor offers steady referrals if the originator pays $500 a month for a desk in the realtor's office - rent well above market and contingent on referral volume. RESPA Section 8 permits payments for bona fide office space at fair market value under a written agreement, but only when the payment is not conditioned on referrals. Here it is, so the arrangement is a disguised referral fee. Disclosing it on the AfBA does not cure it.
Traps. Believing disclosure legalizes a kickback; assuming an employer's review excuses a falsified application; treating a prequalification letter as proof of licensure; omitting the NMLS identifier from social media advertising.