Mortgage Ethics and Fraud Prevention 5

Question 1

A 'chunking' scheme in real estate involves an investor convincing lenders to finance multiple properties simultaneously by:

Accepted Answer

Hiding the multiple simultaneous loan applications from each lender

Answer

Disclosing all properties upfront on each application

Answer

Using only one lender for all properties

Answer

Paying off properties before buying new ones

Question 2

Under the Dodd-Frank Act, which rule prohibits mortgage loan originators from receiving compensation based on the interest rate or other loan terms?

Accepted Answer

The Loan Originator Compensation rule

Answer

The Ability-to-Repay rule

Answer

The Qualified Mortgage rule

Answer

The TRID rule

Question 3

A homeowner facing foreclosure is approached by a company promising to save their home if they temporarily sign the deed over to the company. This is an example of:

Accepted Answer

Foreclosure rescue fraud / deed theft

Answer

A legitimate loss mitigation service

Answer

A permitted short sale arrangement

Answer

A legal deed-in-lieu of foreclosure

Question 4

Which statement best describes the ethical obligation of a mortgage professional regarding a borrower's non-public personal information (NPI)?

Accepted Answer

It must be protected and only used for the purpose it was collected

Answer

It may be shared freely with affiliated companies

Answer

It may be sold to third-party marketers with verbal consent

Answer

It only requires protection after loan closing

Question 5

A loan officer who fabricates employment verification documents for a self-employed borrower without the borrower's knowledge is:

Accepted Answer

Committing fraud regardless of the borrower's innocence

Answer

Helping the borrower qualify legitimately

Answer

Performing an acceptable workaround

Answer

Only liable if the lender discovers the fraud

Question 6

Which of the following is a red flag that a purchase transaction may involve mortgage fraud?

Accepted Answer

The property is being sold far above comparable neighborhood values with an immediate resale

Answer

The borrower has a long employment history with one employer

Answer

The borrower is making a 20% down payment from documented savings

Answer

The appraisal matches the contract price closely

Question 7

Predatory lending practices are prohibited primarily because they:

Accepted Answer

Exploit vulnerable borrowers with unfair, deceptive, or abusive loan terms

Answer

Reduce lender profit margins unfairly

Answer

Violate secondary market underwriting guidelines only

Answer

Increase the supply of affordable housing