In what circumstance is a mortgage broker required to disclose conflicts of interest?

A mortgage broker is required to disclose conflicts of interest when the broker receives compensation from multiple sources. This requirement is essential for maintaining transparency and trust in the mortgage process. When a broker has multiple compensation sources, it creates a potential for bias in the recommendations the broker might make to the borrower. For example, if a broker stands to gain financially from directing a client toward a particular lender, this could influence their advice or selection of loan products, ultimately affecting the client’s best interests.

By disclosing such conflicts, the broker ensures that clients are fully aware of any financial incentives that might affect the brokerage's recommendations or actions. This transparency allows clients to make more informed decisions based on the complete financial picture, thereby promoting ethical practices in the industry.

In contrast, the other options do not capture the comprehensive obligations of a broker regarding conflict disclosures. Request from the client or the minor nature of the conflict does not negate the need for full disclosure, and there is nowhere in the regulatory framework where disclosure is deemed unnecessary outright.