Ethics and Fraud Prevention Flashcards
7 cards from real Mortgage practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethics and Fraud Prevention flashcards as text
A scheme where a property is bought and resold quickly at an artificially inflated price, often with a complicit appraiser, is known as:
Answer: Illegal property flipping
Illegal property flipping involves purchasing a property and quickly reselling it at a fraudulently inflated price, often using a corrupt appraisal.
When a borrower obtains multiple mortgages on the same property from different lenders simultaneously without disclosing this to any lender, it is called:
Answer: Concurrent fraud / simultaneous closing fraud
Obtaining multiple loans on the same property from different lenders at the same time without disclosure is concurrent fraud or simultaneous closing fraud.
Under the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, MLOs are required to disclose which of the following on loan documents?
Answer: Their NMLS unique identifier
The SAFE Act requires mortgage loan originators to include their NMLS unique identifier on all loan documents and advertising.
A loan officer who steers a creditworthy minority borrower to a higher-cost subprime loan rather than a prime loan for which they qualify is engaging in:
Answer: Reverse redlining / predatory targeting
Steering qualified minority borrowers to more expensive products based on race or national origin is reverse redlining, a form of illegal predatory lending.
Which document must a borrower sign at closing acknowledging the property will be their primary residence, making misrepresentation of occupancy a federal offense?
Answer: Occupancy affidavit / certification
The occupancy affidavit or certification signed at closing affirms owner-occupancy intent; falsifying it constitutes federal mortgage fraud.
A title company employee who secretly places a second mortgage lien on a property to steal equity from the homeowner is committing:
Answer: Deed theft / title fraud
Fraudulently placing unauthorized liens or transferring title without the owner's knowledge is deed theft or title fraud, a serious criminal offense.
Which federal agency primarily investigates mortgage fraud cases involving federally insured loans?
Answer: HUD Office of Inspector General
The HUD Office of Inspector General (OIG) is the primary federal investigative agency for fraud involving FHA-insured and other HUD-backed loans.