Ethics
Ethics questions test conduct, not just rules: fraud prevention, fair lending, confidentiality, conflicts, advertising, and anti-money-laundering awareness. The right answer usually protects the borrower and the integrity of the file, even when a supervisor or referral partner pressures otherwise.
Core duties
- Honesty and accuracy: Never falsify income, assets, occupancy, employment, or property data. Borrower consent does not make fraud acceptable. Do not create or accept altered documents.
- Fair lending: ECOA and the Fair Housing Act prohibit discrimination in credit and housing. Watch for disparate treatment, steering, redlining, and discouraging protected applicants.
- Privacy: Safeguard nonpublic personal information under GLBA; share only with permissible purpose and minimum necessary access.
- Conflicts and compensation: Disclose affiliate relationships. Loan-originator compensation cannot be based on transaction terms or conditions other than the loan amount, and dual compensation is restricted.
- AML: Follow CIP, monitor suspicious activity, and escalate to the institution BSA officer. Do not tip off the customer about a SAR.
Worked example
A borrower asks a loan officer to add $10,000 of unearned income so the debt-to-income ratio qualifies. The loan officer refuses, documents the true income, and explains that the loan may not be approved. Inflating income would be fraud, could violate SAFE Act conduct standards, and would expose the borrower and originator to civil and criminal risk. The loan officer should not suggest a straw buyer or a false occupancy statement as a workaround.
Traps
Do not assume the borrower approved it cures misrepresentation. Do not treat a disclosed affiliate fee as automatically lawful. Do not discuss a SAR with the borrower. Do not use advertising that implies government approval. Do not let a referral relationship influence product steering.