Mortgage Mortgage Ethics and Fraud Prevention Questions and Answers 2

Question 1

A loan officer inflates a borrower's income on the application to help them qualify for a larger loan. What type of fraud is this?

Accepted Answer

Income fraud

Answer

Identity theft

Answer

Equity skimming

Answer

Property flipping fraud

Question 2

Which federal law requires mortgage professionals to report suspected fraud?

Accepted Answer

Bank Secrecy Act (BSA)

Answer

Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)

Answer

Truth in Lending Act (TILA)

Answer

Real Estate Settlement Procedures Act (RESPA)

Question 3

An appraiser knowingly overvalues a property at the request of a real estate agent to facilitate a sale. Which ethical violation has occurred?

Accepted Answer

Appraisal independence violation

Answer

Redlining

Answer

Predatory lending

Answer

Churning

Question 4

What is a 'straw buyer' in the context of mortgage fraud?

Accepted Answer

A buyer who purchases property on behalf of someone who cannot qualify for a mortgage

Answer

A buyer who negotiates below market value

Answer

A buyer who pays entirely in cash to avoid disclosure

Answer

A buyer who refinances immediately after closing

Question 5

Which practice involves a mortgage originator steering a qualified borrower into a higher-cost loan to earn a larger commission?

Accepted Answer

Predatory lending

Answer

Short selling

Answer

Loan modification fraud

Answer

Air loans

Question 6

Under the SAFE Act, what is required of all mortgage loan originators?

Accepted Answer

State licensing or federal registration and completion of pre-licensing education

Answer

Membership in the National Association of Realtors

Answer

A minimum of 10 years of banking experience

Answer

Passing the bar exam in their state of practice