Ethics
Ethics questions rarely test a statute; they test judgment under temptation. The consistent themes are honesty, disclosure, confidentiality, and non-discrimination.
Start with duty. An MLO owes the borrower accurate information, a loan the borrower can reasonably repay, and full disclosure of costs and conflicts. Never sign for a borrower, never backdate a document, never complete a blank field the borrower should complete, and never tell a borrower to leave a debt off the application. If a borrower asks you to inflate income or claim owner-occupancy on an investment property, the answer is no - and the conversation should be documented.
Fair lending is an ethics issue as well as a legal one. Steering borrowers toward or away from products based on race, ethnicity, national origin, religion, sex, familial status, disability, age, or marital status is prohibited. So is redlining, discouraging a borrower from applying, or applying different standards to similar files. Language preference and immigration status questions require careful, consistent handling.
Privacy: GLBA limits sharing nonpublic personal information, and the borrower's data never leaves the file for personal use or casual conversation.
Anti-kickback: any payment for a referral - cash, gifts, marketing support, or free services - violates RESPA Section 8 and is unethical even when everyone in the room agrees to it.
Traps: questions offer a choice that is legal but not the best practice, or an action that helps the borrower in the short run but involves a misrepresentation. Choose the option that discloses, documents, and escalates.
Rule of thumb: if you would not want the action described in a regulatory exam report, do not do it. Worked example: a realtor offers $500 per closed loan for referrals - decline; referral fees for settlement services are prohibited and no written agreement cures it.