Mortgage Ethics and Fraud Prevention 3

Question 1

A scheme where a property is bought and resold quickly at an artificially inflated price, often with a complicit appraiser, is known as:

Accepted Answer

Illegal property flipping

Answer

Illegal property flipping involves purchasing a property and quickly reselling it at a fraudulently inflated price, often using a corrupt appraisal.

Question 2

When a borrower obtains multiple mortgages on the same property from different lenders simultaneously without disclosing this to any lender, it is called:

Accepted Answer

Concurrent fraud / simultaneous closing fraud

Answer

Obtaining multiple loans on the same property from different lenders at the same time without disclosure is concurrent fraud or simultaneous closing fraud.

Question 3

Under the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, MLOs are required to disclose which of the following on loan documents?

Accepted Answer

Their NMLS unique identifier

Answer

The SAFE Act requires mortgage loan originators to include their NMLS unique identifier on all loan documents and advertising.

Question 4

A loan officer who steers a creditworthy minority borrower to a higher-cost subprime loan rather than a prime loan for which they qualify is engaging in:

Accepted Answer

Reverse redlining / predatory targeting

Answer

Steering qualified minority borrowers to more expensive products based on race or national origin is reverse redlining, a form of illegal predatory lending.

Question 5

Which document must a borrower sign at closing acknowledging the property will be their primary residence, making misrepresentation of occupancy a federal offense?

Accepted Answer

Occupancy affidavit / certification

Answer

The occupancy affidavit or certification signed at closing affirms owner-occupancy intent; falsifying it constitutes federal mortgage fraud.

Mortgage Practice Test

Mortgage Practice Test

Mortgage Ethics and Fraud Prevention 3