Mortgage Fraud Prevention and Risk Management Flashcards

A borrower states on the application that a condo will be their primary residence, but plans to rent it out. What type of fraud is this?

Answer: Occupancy fraud

Misstating intended occupancy to get better rates or terms is occupancy fraud.

Under FinCEN rules for non-bank residential mortgage lenders and originators, a SAR generally must be filed within how many days of detecting facts that warrant filing?

Answer: 30 days

A SAR is due within 30 calendar days of initial detection (60 if no suspect is identified).

Which federal rule requires certain creditors to maintain a written program to detect and respond to identity theft warning signs?

Answer: Red Flags Rule

The FTC Red Flags Rule requires a written Identity Theft Prevention Program for covered creditors.

A person with good credit signs loan documents in name only so someone else can obtain financing and take the property. This person is called a:

Answer: Straw buyer

A straw buyer lends their name and credit while the true borrower is concealed from the lender.

A property is bought and resold within days at a sharply higher price supported by an inflated appraisal. This scheme is commonly called:

Answer: Property flipping fraud

Fraudulent flipping relies on artificially inflated values to resell quickly for illegal profit.

Before closing a loan, a lender's compliance staff should screen all parties against which list to avoid prohibited transactions?

Answer: OFAC Specially Designated Nationals list

OFAC's SDN list identifies persons with whom U.S. persons are prohibited from doing business.

A loan officer accepts payments from a title company in exchange for referring borrowers. Which law is most directly violated?

Answer: RESPA Section 8

RESPA Section 8 prohibits kickbacks and unearned fees for settlement service referrals.