NMLS Mortgage Fraud Prevention and Risk Management

Question 1

What term describes a person who obtains a mortgage on behalf of another party who cannot qualify, concealing the true buyer's identity from the lender?

Accepted Answer

Straw buyer

Answer

A straw buyer applies for a mortgage on behalf of another person—often someone ineligible—who will actually receive the property, constituting loan fraud.

Question 2

Under the Bank Secrecy Act, within how many days must a Suspicious Activity Report (SAR) be filed after detecting suspicious activity involving $5,000 or more?

Accepted Answer

30 days

Answer

The BSA requires financial institutions to file a SAR within 30 calendar days of initially detecting the suspicious activity.

Question 3

What type of mortgage fraud involves rapid resales of a property between related parties using inflated appraisals to deceive lenders?

Accepted Answer

Illegal property flipping

Answer

Illegal property flipping uses a sequence of staged sales and fraudulent appraisals to artificially inflate a property's apparent value before a lender funds the final loan.

Question 4

In mortgage fraud, an 'air loan' is best described as:

Accepted Answer

A loan on a non-existent property with fabricated borrowers and collateral

Answer

Air loans involve completely fictitious transactions—fake borrowers, fake properties, fake employers—leaving the lender with no real collateral whatsoever.

Question 5

Which of the following is a red flag that may indicate occupancy fraud on a mortgage application?

Accepted Answer

Borrower lists a distant rental address as their intended primary residence

Answer

Claiming a property will be owner-occupied when the borrower intends to rent it out is occupancy fraud, used to obtain more favorable interest rates and terms.

(NMLS) National Mortgage Licensing System Practice Test

(NMLS) National Mortgage Licensing System Practice Test

NMLS Mortgage Fraud Prevention and Risk Management