An MLO discovers that a borrower has intentionally understated their debt obligations. Ethically, what is the MLO's primary responsibility?
Understand the Problem
The question is asking about the ethical responsibility of a Mortgage Loan Originator (MLO) when they discover a borrower has intentionally provided false information (understated debt) on their loan application. We need to identify the most ethical and responsible course of action from the options provided.
Answer
Report the discrepancy and ensure loan application accuracy.
The MLO's primary ethical responsibility is to report the discrepancy and ensure the accuracy of the loan application. This maintains the integrity of the lending process and protects the lender from potential risk.
Answer for screen readers
The MLO's primary ethical responsibility is to report the discrepancy and ensure the accuracy of the loan application. This maintains the integrity of the lending process and protects the lender from potential risk.
More Information
MLOs are expected to act with honesty and integrity, which includes ensuring that loan applications are accurate and complete. Failure to report such discrepancies can have legal and ethical consequences for the MLO.
Tips
A common mistake is to prioritize closing the loan over ethical obligations. Always prioritize accuracy and transparency.
Sources
- Free MLO Practice Test 2025 - 200 Mortgage Loan Officer Qs - careeremployer.com
- [PDF] CSBS/AARMR Model State Law for the Implementation of the SAFE ... - mortgage.nationwidelicensingsystem.org
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