Ethics
Ethics
This domain tests integrity, fair lending, fraud prevention, privacy, and conflicts of interest. The exam expects you to choose the lawful consumer-protective action, not the profitable shortcut.
Core standards
- Fair lending: Do not discriminate or steer borrowers based on protected characteristics. Offer equal access to products and information.
- Fraud prevention: Do not falsify income, assets, occupancy, or property data. Stop if a borrower asks you to inflate figures or sign blank documents.
- Conflicts and referrals: RESPA Section 8 prohibits fees or things of value for settlement-service referrals. Disclosure does not cure a kickback.
- Privacy: Protect nonpublic personal information under GLBA and limit sharing as required.
- UDAAP: Avoid unfair, deceptive, or abusive acts or practices, including misleading advertising and hidden fees.
Worked example
A title company offers a loan officer $500 for each borrower referred to it. The loan officer discloses the payment to the borrower and accepts it. This still violates RESPA Section 8 because the payment is for a referral of settlement-service business. Disclosure does not create a safe harbor, and the arrangement could also raise UDAAP concerns.
Traps
Believing a disclosed kickback is legal. Padding income to help a borrower qualify. Steering a borrower to a higher-cost loan for a larger commission. Ignoring discriminatory comments or pressure to alter documents. Treating privacy as a paperwork issue rather than a consumer-protection duty.