SAFE MLO TEST ETHICS FINAL PAPER
PRACTICE SOLUTION TESTED QUESTIONS
WITH COMPLETE ANSWERS
●● What is steering?
Answer: Directing a borrower toward a specific loan product for
personal gain. Be prepared to define and identify these practices and
their legal implications.
●● What is redlining?
Answer: Refusing loans in certain neighborhoods based on
demographics, which is illegal. Be prepared to define and identify these
practices and their legal implications.
●● What is reverse redlining?
Answer: Targeting specific communities, often minority groups, for
predatory lending practices. Be prepared to define and identify these
practices and their legal implications.
●● What is a conflict of interest?
Answer: When an MLO's personal interests interfere with their
professional responsibilities. Ethics questions often include real-world
scenarios involving borrower treatment or disclosures.
, ●● What is predatory lending?
Answer: Exploiting borrowers by offering unfair terms, excessive fees,
or unsuitable loans.
●● What is dual compensation?
Answer: Receiving payment from both the borrower and another party,
which is prohibited.
●● What is the purpose of the Equal Credit Opportunity Act (ECOA)?
Answer: To prevent discrimination in lending.
●● What is disparate treatment?
Answer: Intentionally treating borrowers differently based on protected
characteristics.
●● What is disparate impact?
Answer: Policies that unintentionally disadvantage certain groups.
●● What are kickbacks?
Answer: Illegal payments for referrals in mortgage transactions. RESPA
Section 8 is frequently tested. Know penalties and prohibited practices.
●● What is the Consumer Financial Protection Bureau (CFPB)?
PRACTICE SOLUTION TESTED QUESTIONS
WITH COMPLETE ANSWERS
●● What is steering?
Answer: Directing a borrower toward a specific loan product for
personal gain. Be prepared to define and identify these practices and
their legal implications.
●● What is redlining?
Answer: Refusing loans in certain neighborhoods based on
demographics, which is illegal. Be prepared to define and identify these
practices and their legal implications.
●● What is reverse redlining?
Answer: Targeting specific communities, often minority groups, for
predatory lending practices. Be prepared to define and identify these
practices and their legal implications.
●● What is a conflict of interest?
Answer: When an MLO's personal interests interfere with their
professional responsibilities. Ethics questions often include real-world
scenarios involving borrower treatment or disclosures.
, ●● What is predatory lending?
Answer: Exploiting borrowers by offering unfair terms, excessive fees,
or unsuitable loans.
●● What is dual compensation?
Answer: Receiving payment from both the borrower and another party,
which is prohibited.
●● What is the purpose of the Equal Credit Opportunity Act (ECOA)?
Answer: To prevent discrimination in lending.
●● What is disparate treatment?
Answer: Intentionally treating borrowers differently based on protected
characteristics.
●● What is disparate impact?
Answer: Policies that unintentionally disadvantage certain groups.
●● What are kickbacks?
Answer: Illegal payments for referrals in mortgage transactions. RESPA
Section 8 is frequently tested. Know penalties and prohibited practices.
●● What is the Consumer Financial Protection Bureau (CFPB)?
