MLO Ethics Practice Questions (Fraud, Fair Lending, UDAAP)
What this area covers
- Fair lending: ECOA/Reg B and the Fair Housing Act (42 U.S.C. §3605).
- Mortgage fraud: occupancy fraud, straw buyers, undisclosed debts, and false statements (18 U.S.C. §1014).
- Unfair, deceptive, or abusive acts or practices (12 U.S.C. §5531).
- Truthful advertising and referral-fee rules.
- Protecting borrower information.
Ethics questions are often scenarios. Ask yourself what the law requires, not what would close the loan.
10 practice questions
- 30 days
- 10 years
- 5 years
- 1 year after the alleged discriminatory housing practice
Show answer and explanation
Answer: D. 1 year after the alleged discriminatory housing practice
Correct — 42 U.S.C. §3610(a)(1)(A)(i).
- 90 days
- 1 year
- 6 years
- 2 years after the alleged discriminatory practice
Show answer and explanation
Answer: D. 2 years after the alleged discriminatory practice
Correct — 42 U.S.C. §3613(a)(1)(A).
- Proper risk-based pricing
- Required counseling
- A safe harbor practice
- Disparate treatment
Show answer and explanation
Answer: D. Disparate treatment
Correct — treating someone differently because of a prohibited basis violates ECOA and the FHA.
- Redlining by definition
- Blockbusting
- Disparate impact discrimination
- Always legal
Show answer and explanation
Answer: C. Disparate impact discrimination
Correct — recognized under the Reg B commentary and the FHA.
- Redlining
- Risk-based pricing
- Fair lending
- Reverse redlining
Show answer and explanation
Answer: D. Reverse redlining
Correct.
- Blockbusting
- Steering
- Redlining
- Appraisal fraud
Show answer and explanation
Answer: A. Blockbusting
Correct — 42 U.S.C. §3604(e).
- Is legal under state law
- Is disclosed in fine print
- Consumers can't reasonably avoid and that isn't outweighed by benefits to consumers or competition
- Affects only one consumer
Show answer and explanation
Answer: C. Consumers can't reasonably avoid and that isn't outweighed by benefits to consumers or competition
Correct — 12 U.S.C. §5531(c).
- Offers adjustable-rate loans
- Takes unreasonable advantage of a consumer's lack of understanding of a product's material risks, costs, or conditions
- Requires a credit check
- Charges any fee
Show answer and explanation
Answer: B. Takes unreasonable advantage of a consumer's lack of understanding of a product's material risks, costs, or conditions
Correct — 12 U.S.C. §5531(d).
- FEMA
- The IRS
- The FDIC only
- The CFPB
Show answer and explanation
Answer: D. The CFPB
Correct — 12 U.S.C. §5531 and §5536.
- $500 and 30 days
- A $1,000,000 fine and 30 years in prison
- Only a license suspension
- A warning letter
Show answer and explanation
Answer: B. A $1,000,000 fine and 30 years in prison
Correct — 18 U.S.C. §1014.
Practice with every question
Focused, not overwhelming: 717 questions in 11 short chapters, each with an explanation for every option and an official source, plus three timed 120-question, 190-minute practice exams.
More free practice
Official sources
- 42 U.S.C. §3605 (Fair Housing Act, residential real estate transactions)
- 12 CFR Part 1002 (Regulation B, ECOA)
- 12 U.S.C. §5531 (UDAAP)
- 18 U.S.C. §1014 (false statements on loan applications)
- NMLS: SAFE MLO Test content outline
FAQ
How much of the MLO exam is ethics?
18%, about 21 of 115 scored questions (our arithmetic from the NMLS outline weight).
What ethics topics are tested?
Fair lending, fraud, consumer protection (UDAAP), advertising, and referral fees, per the NMLS content outline.