10 questions, graded as you go, with the reason for every answer. No sign-up.
What this covers
Mortgage fraud
Ethical duties
Appraiser independence
Predatory lending
Advertising
Fraud red flags
Sample questions
A borrower overstates his income on the application so he can qualify to buy a house he intends to live in and pay for. How is this type of fraud classified?
Fraud for profit
Fraud for housing
Equity skimming
An air loan
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B. Fraud for housing
Fraud for housing is committed by a borrower who wants the home and misstates facts to get the loan. Fraud for profit usually involves industry insiders taking cash out of transactions. Both are crimes; the label describes the motive.
Reference: Ethics: mortgage fraud categories
A borrower states on the application that she will live in the property, but she actually plans to rent it out from the day of closing. What kind of fraud is this?
Appraisal fraud
Identity fraud
Occupancy fraud
Employment fraud
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C. Occupancy fraud
Claiming owner occupancy to get the lower rate and down payment offered on a primary residence, while intending to use the property as a rental, is occupancy fraud. It is a material misstatement even if every payment is made.
A loan made with no documentation of the borrower's income
A loan made for more than the appraised value of the home
A loan made on a property or to a borrower that does not exist
A loan made on a home that is still under construction
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C. A loan made on a property or to a borrower that does not exist
In an air loan the borrower, the property or both are invented, and the fraudster pockets the proceeds. A no-documentation loan may be risky but involves a real borrower and a real property.
