NMLS Mortgage Fraud Prevention and Risk Management 5

Question 1

A loan is funded on a property that does not exist, using a fictitious borrower. This is known as a(n):

Accepted Answer

Air loan

Answer

An air loan is a loan made on a nonexistent property or borrower.

Question 2

A seller secretly funds the buyer's down payment through an undisclosed second lien that the first-lien lender never learns about. This is called a:

Accepted Answer

Silent second

Answer

A silent second is undisclosed subordinate financing that hides the borrower's true equity stake.

Question 3

A borrower overstates income to qualify for a home they intend to live in and want to keep. Which category does this fall into?

Accepted Answer

Fraud for housing

Answer

Fraud for housing involves borrower misrepresentation to obtain a residence, not to make illicit profit.

Question 4

Knowingly making false statements to influence a federally insured lender's loan decision can carry up to what maximum federal penalty under 18 U.S.C. 1014?

Accepted Answer

30 years and $1,000,000

Answer

18 U.S.C. 1014 allows up to 30 years in prison and a $1 million fine.

Question 5

What is the best practice for verifying a borrower's employment when a paystub looks suspicious?

Accepted Answer

Contact the employer using independently sourced contact information

Answer

Independently sourced contact details prevent fraudsters from routing verification to accomplices.

(NMLS) National Mortgage Licensing System Practice Test

(NMLS) National Mortgage Licensing System Practice Test

NMLS Mortgage Fraud Prevention and Risk Management 5