ETHICS Flashcards
Who does the LO work for?
you are working for the borrower, but you must protect your company.
Fair Lending, Fair Housing, & ECOA advise what?
Everyone has the right to apply.
All of the borrowers information must be kept Confidential under…..?
Gramm, Leach Bliley and the Safeguard Rules
You must consider ___________, but you only have to count it if the assistance meets program requirements for income.
Public Assistance
You __________ the right to change documentation to assist the borrower meeting program guidelines.
do not have
Define: Redlining
You cannot refuse to take an application, no matter the location of the property.
Define: Reverse Redlining
Charging more for interest rates and costs in a certain area, because of risk factors or the area itself.
Define: Steering
You cannot steer the borrower to live in a certain area or force them to take a specific program.
No _____ or _____ can be paid for any reason.
Referrals / Kickbacks
All joint marketing is to be split ___ - ___.
50-50
If an appraiser is connected to anyone in the loan, the appraiser must be _______.
Replaced
You cannot talk to or contact the appraiser to…..?
influence value, threaten payment, or cut them off from any new business.
It is your responsibility to report any loan files to your compliance officer on which you feel the borrower is providing _________ information.
fraudulent
You can be penalized or fired if you…….?
doctor any documents for the borrower.
It is your responsibility to inform the underwriter of….? Why?
Changes to the loan file. If you don’t the company will have to repurchase a loan because of information that was withheld. The investor will find out.
It is your responsibility to make sure the ______ & _______ match up with your verifications.
Bank Statements & Income
What must be verified on all agency programs?
All income, assets, and any information when qualifying the borrower.
If you are offering a borrower a non-traditional loan, you must….?
Show the borrower examples of other loan products that you offer.
Any person that does one of the following is required to be licensed:
Takes or solicits loan applications.
Negotiates terms.
Expects compensation on the loan.
When is an Affiliated Business Disclosure required?
If an MLO is licensed as a Realtor & Loan Officer OR if they or their family own as little as 1% of a third-party company.
Define: Referral
Anything of value being given or received from a third-party company, realtor, or builder.
Are kickbacks allowed in receiving or paying on any transaction?
No
When should an appraiser excuse themselves from an assignment?
if they are connected, in any way, to anyone on the transaction.
You cannot use any language that would __________________________________ with your company.
infer the consumer should not apply
Define: Asset Fraud
Verifications must match the documentation given to you by the borrower.
Define: Sales Contract Red Flags
Sellers on the contract must match with the title owners listed on the title report.
Explain personal property during fraud checks.
Must be backed out of the sales price, as you can only borrower against real estate. Also, the appraiser cannot appraise personal property into the value.
Define: Occupancy Fraud
FHA requires the borrower to owner occupy for 60 days. Fannie, Freddie, USDA, & VA require the borrower to occupy the property.
FHA requires the borrower to owner occupy for ___________?
60 days
What are the loan types that require the borrower to occupy the property?
Fannie, Freddie, USDA, and VA
Explain Income Fraud
Make sure verifications match the documentation provided by the borrower. the 4506-C must match their tax returns. You need to verify overtime and bonuses are likely to continue.
Define: Power of Attorney (POA)
Refers to who is given the right to sue it and whether it is a limited or full POA. Any POA must be approved by the underwriter.
Why is fraud increasing?
Due to medical or home providers are applying for and closing Cash-Out Refinances without the owner’s knowledge.
Define: Wire Fraud
Ever-increasing fraud, where the borrower receives a request for funds to be wired to someone that is not connected to the transaction. It’s crucial to tell the borrower not to wire funds without asking you or the title company if the request is real.
What should you advise the borrower in regards to wire fraud?
To not wire funds without asking you or the title company if the request is real.