EthicsQuestion 320 of 400
A loan officer's brother owns the appraisal company being used on the officer's own borrower's loan. The most ethical action is to:
a.Say nothing, since appraisals are independent anyway
b.Personally instruct the appraiser on the value needed
c.Disclose the relationship and ensure appraiser independence is maintained
d.Cancel the loan to avoid any appearance of a conflict
Explanation
Disclosing the conflict and preserving appraiser independence properly manages the situation without harming the borrower. Concealing the relationship risks an undisclosed conflict, instructing the appraiser on value is illegal coercion, and cancelling a legitimate loan needlessly harms the borrower.
Law Reference: Ethical duty / conflicts of interestPractice all 400 questions free — no signup required.
Related questions on this topic
- A title company pays a mortgage broker $200 for each loan referred to it, with no service performed in return. Under RESPA Section 8, this payment is:
- Which of the following payments is generally PERMITTED under RESPA Section 8?
- RESPA Section 8's anti-kickback provisions apply to referrals of business involving:
- A loan officer discovers that a coworker is knowingly submitting falsified bank statements for clients. The most ethical and appropriate response is to:
- A buyer and seller agree that the seller will secretly lend the buyer the down payment through an undisclosed second loan, hidden from the primary lender. This is:
- Under ECOA/Regulation B, a lender may ask an applicant's marital status:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against NMLS SAFE Mortgage Loan Originator National Test · How we review