Information from the great and wise Enchanters of olde:
On top of your own faction changing efforts, the following things affect faction:
God - NPCs instinctively know what religion you are. And this is fixed. If you're an Inny worshipper, you always get the same Inny worshipper modifer.
Race - You get the fixed, base faction of whatever Race you happen to look like at the time.
Class - NPCs can tell what you do for a living. And this is fixed.
Spells can alter faction. For instance, Collaboration.
NPC-specific modifier. For instance, Gypsies held to their beliefs, regardless of any spell cast.
A Zone modifier may exist, but is only extremely rarely present, and even then maybe not until Velious. Rumour is that this Zone modifier used to cause an erroneous "[random mob] strikes you for blah blah... [random mob] dies." message when you immediately zoned.
Combine them all in some arcane way and you get your total faction.
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