Mortgage Ethics and Fraud Prevention 4

Question 1

A borrower who claims a rental property as their primary residence to obtain a lower interest rate is committing:

Accepted Answer

Occupancy fraud

Answer

A minor disclosure oversight

Answer

An appraisal violation

Answer

A TILA breach only

Question 2

In a 'builder bailout' scheme, a real estate developer secretly provides down payment funds to buyers while falsely certifying the buyer provided funds themselves. This inflates the:

Accepted Answer

Loan-to-value ratio beyond what is disclosed to the lender

Answer

Property's assessed tax value

Answer

The borrower's credit score

Answer

The title insurance premium

Question 3

A mortgage professional who discovers a colleague is submitting fraudulent loan files should first:

Accepted Answer

Report the activity through proper channels such as compliance or a SAR filing

Answer

Confront the colleague privately and give them a chance to correct it

Answer

Ignore it as it is not their responsibility

Answer

Wait to see if the loans default before acting

Question 4

Which type of fraud involves a criminal assuming a homeowner's identity to illegally transfer property title and then obtain a mortgage?

Accepted Answer

Identity theft / deed fraud

Answer

Short sale fraud

Answer

Equity stripping

Answer

Silent second scheme

Question 5

The Home Mortgage Disclosure Act (HMDA) helps detect potential discriminatory lending practices primarily by requiring lenders to:

Accepted Answer

Collect and report demographic data on loan applicants

Answer

Charge uniform rates to all borrowers

Answer

Limit their geographic service area

Answer

Provide free credit counseling

Question 6

A mortgage loan originator who charges a borrower an undisclosed fee and pockets it personally is committing:

Accepted Answer

Embezzlement and an undisclosed fee violation

Answer

A permitted origination practice

Answer

A yield spread premium adjustment

Answer

A routine processing error

Question 7

When evaluating a mortgage application, a loan officer who ignores clear signs of fraudulent documentation to close the loan is said to have practiced:

Accepted Answer

Willful blindness / deliberate ignorance

Answer

Reasonable reliance

Answer

Due diligence

Answer

Prudent underwriting