Ethics

Question 1

What is Ethics?

Answer 1

Moral Principals that govern a persons behavior or conduct

Question 2

What is Morality?

Answer 2

Principals concerning the distinction between right and wrong or good and bad behavior

Question 3

Name the 3 types of mortgage fraud

Answer 3

1. Fraud for Housing
2. Fraud for Profit
3. Fraud for Criminal Enterprise

Question 4

What is fraud for housing?

Answer 4

When borrower materially misrepresents information on a mortgage loan application. Such as employment, income, or assets.

Question 5

What is Fraud for Profit?

Answer 5

Aims at not securing housing but to misuse the mortgage lending process to steal cash and equity from lenders or homeowners.

Question 6

What is fraud for criminal enterprise?

Answer 6

Fraud committed by organized crime organizations for money laundering. Patriot Act and Bank Secrecy Act both look to stem this.

Question 7

What are Straw Buyers

Answer 7

An individual used by fraudsters to obtain mortgages. Entity will compensate individual with lump sum.

Question 8

What are Air Loans

Answer 8

Is a loan that has a straw or non-existent buyer, or a non-existent property. Totally pulled out of thin air.

Question 9

Explain illegal Property Flips

Answer 9

Illegal property flipping occurs when the property is purchased and resold quickly at an artificially inflated price by using inflated appraisals.

Question 10

What is chunking

Answer 10

The sale of properties at artificially inflated prices, pitched as investment opportunities to naive real estate investors who are promised high returns and loan risks.

Question 11

What is builder/excessive sales incentive

Answer 11

Builder with several unsold units schemes to sell the remaining properties fraudulently

Question 12

What is a buy and bail

Answer 12

Homeowners is current on their mortgage but the value o their house has fallen below the amount owed. Purchase new property to bail on the one that is underwater

Question 13

What is a foreclosure rescue scheme?

Answer 13

Fraudsters that promise to help borrower avoid foreclosure. Charging upfront costs and giving bad advise.

Question 14

What is MARs Rule or Mortgage Assistance Relief Services Rule

Answer 14

It made it illegal to charge upfront fees and requires specific disclosures in ads for mortgage assistance relief providers.

Question 15

What is a short sale

Answer 15

Means of selling a house for less than the outstanding mortgage on it. An option before being repossessed by the lender.

Question 16

What is short sale fraud

Answer 16

When a perpetrators profit by concealing parties to the transaction or contingent transactions or falsifying material information, including the actual value of the property, so the services can not make an informed short sale decision

Question 17

What are Unauthorized Fees and payout Characteristics

Answer 17

Type of foreclosure rescue scheme where an advance fee scheme is perpetrated by a foreclosure rescue specialist where fees and payouts were not approved by the servicer agreeing to the short sale reflected on the HUD-1 or CD

Question 18

A non-arm’s length short sale transaction

Answer 18

Occurs when the borrower has a direct relationship or business affiliation with seller. Family member buying home at a reduced cost

Question 19

What is a short sale flip

Answer 19

Perpetrator manipulates the short sale lender into approving a short payoff and conceals an immediate contingent sale to a pre-arranged end-buyer at a significantly higher sales price

Question 20

What is reverse mortgage fraud

Answer 20

Manipulates the senior citizen into obtaining a revers mort. Loan and then pockets the senior victims proceeds.

Question 21

What is Affinity Fraud

Answer 21

Person rely on a a common bond and exploit the trust and friendship that typically exists in the group of individuals with a common bond to support the scheme. Ie. Church

Question 22

What is equity-skimming scheme

Answer 22

A investor buys a property from a homeowner facing foreclosure and agrees to lease the home to the homeowner who may remain in the house as the tenant. Eventually will reconvey the property to homeowner again via a deed.

Question 23

What is a loan modification?

Answer 23

Permanent restructuring of a mortgage if a borrower cannot make a payments due to financial hardship

Question 24

What is a loan modification scheme?

Answer 24

Charge upfront fees along with options to keep someone in house that is facing delinquency. Putting homeowners in higher risk of losing home.

Question 25

What was the purpose of the Dodd-Frank Wall Street reform and consumer protection act (Dodd-Frank) in terms of prohibiting practices.

Answer 25

Prohibited unfair, deceptive, or abusive acts or practices (UDAAP)

Question 26

What is Predatory Lending?

Answer 26

Unscrupulous actions carried out by a lender to entice, induce or assist a borrower in taking a mortgage that carries high fees, interest rates, or takes an advantage of borrower.

Question 27

What is credit insurance packing?

Answer 27

Occurs when a lender sneaks in paperwork at closing that provides for credit insurance or other benefits that the borrower did not request. Lender tries to sneak signature.

Question 28

What is price gouging?

Answer 28

When a vendor takes advantage of consumer by charging high prices, through fraudulent acts or because the consumer has no other alternative

Question 29

What is equity stripping?

Answer 29

When a lender allows the borrower to get a loan they do not qualify for therefore lender is after the borrowers equity when they foreclose

Question 30

What is churning or repeated refinancing ?

Answer 30

Is excessive selling/lending activity to generate fees and commissions. Multiple refinances or switching from arm to fixed etc.

Question 31

What is steering and targeting?

Answer 31

Occurred when am MLO steers borrower into a subprime product when they could qualify for a better loan. Normally incentive for originator

Question 32

What time are telemarketers unable to call?

Answer 32

May not call before 8am or after 9pm

Question 33

With the telemarketing and consumer fraud and abuse prevention act, what are the existing customer solicitation rules?

Answer 33

An existing customer is 18 mo and 90 days for a pre-qual.

Question 34

What is fair lending?

Answer 34

Essentially granting access to credit to everyone and anyone who wishes to submit an application

Question 35

Desperate treatment is either 2 things, that is?

Answer 35

Overt discrimination or comparative evidence

Question 36

What is overt discrimination?

Answer 36

Lender openly discriminates or prohibits basis; this can be a written policy or an oral statement.

Question 37

What is comparative evidence of discrimination?

Answer 37

Is when it isn’t as obvious that discrimination was made. But if you compare similar files between two different races they are the same and different rates were used.

Question 38

What is Disparate Impact?

Answer 38

Occurs when a a policy or practice is put into place and disproportionately excludes or burdens certain groups of people on a prohibited basis. For example a min loan limit of 150,000 in a minority neighborhood with average home values of 100,000.

Question 39

What is Redlining?

Answer 39

When a institution makes in extremely difficult for a certain area or neighborhood to borrow money.

Question 40

What is reverse redlining?

Answer 40

Where a financial institution lends specifically in poor inner-city neighborhoods to charge them more than a white consumer

Question 41

What is blockbusting?

Answer 41

When real estate agents and developers attempt to convince white owners to sell houses at low prices by promoting fear that racial minorities are soon moving to area.