Ehics In Mortgage Lending

Front 1

Abusive Act

Back 1

Action that materially interferes with a consumer ability to understand the product or service

Front 2

An offer made in good faith with no element of fraud

Back 2

Bona Fiide Offer

Front 3

Independent agency within Federal Reserve with rule making and enforcement authority

Back 3

CFPB Consumer Financial Protection Bureau

Front 4

"Advertisement is a commercial message in any medium that promotes directly or indirectly a credit transaction" as defined by:

Back 4

Regulation Z

Front 5

What law prohibits unfair or deceptive practices of any kind thus advertizing must tell the truth and not mislead consumers

Back 5

Section 5 of the Federal Trade Commission

Front 6

When a misrepresentation is made with the intent to decieve it is

Back 6

Actionable Fraud

Front 7

Information if known might have caused a reasonable

Back 7

Material fact

Front 8

When one misrepresents information accidentally or out of negligence is that actionable fraud?

Back 8

No, but an MLO must strive to be factually accurate in all communication

Front 9

What is the primary purpose of the bait-and-switch advertisement

Back 9

To obtain leads of people who are interested in buying merchandise of the type that is advertised

Front 10

When an Advertiser makes a bona fide offer they intend to

Back 10

Actually sell the product offered and the product is available within a reasonable time period. And they don't downplay it to sell something more advantageous to the lender

Front 11

What does it mean to "switch after sale"

Back 11

It's a process of "unselling" a product with intent and purpose of selling other merchandise instead

Front 12

If a consumer chooses to accept switched offer when he was lured in by a bait-and-switch does this make it legal?

Back 12

No. according to 16 CFR part 238 even though the facts are subsequently made known to the buyer the law is still violated if the first Contact or interview is secured by deception

Front 13

What organization issues guidance on unfair and deceptive practices

Back 13

CFPB

Front 14

An unfair practice is

Back 14

An act that causes or is likely to cause substantial injury and that injury is not reasonably avoided by consumers neither is it outweighed by prevailing benefits to the consumer

Front 15

If the lender takes advantage of the consumer because they think the lender will act in their best interest. This would be an example of an

Back 15

Abusive act

Front 16

Deceptive practices include

Back 16

1. Omission or acts that mislead the consumer.

2. Information, in which if the customer knew, they would have made a different decision.

3. Their misunderstanding is understandable.

Front 17

Laws that regulate print and broadcast media also apply to

Back 17

Marketing on the internet

Front 18

Advertising must be

Back 18

Truthful and not misleading

Front 19

Advertising Disclosures must be:

Back 19

placed near the triggering claim

Front 20

If one uses a hyperlink they must make the link

Back 20

Obvious an appropriately labeled

Front 21

Advertisers should use _______ _______ and __________ so that consumers can understand the disclosures

Back 21

Clear language and syntax

Front 22

State the Civil Rights Act of 1866

Back 22

All citizens of the United States shall have the same right, in every state and territory, as enjoyed by White Citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property

Front 23

Civil Rights Act of 1866 is based upon what amendment?

Back 23

13th Amendment of the US Constitution which prohibits slavery

Front 24

Define injunctions

Back 24

Court orders requiring the defendant to do or refrain from doing a particular Act

Front 25

Define compensatory damages

Back 25

Reimbursement for expenses caused by discrimination and or for emotional distress

Front 26

Define punitive damages

Back 26

To punish the wrongdoer if the acts are deliberate and malicious

Front 27

There is never an exemption to

Back 27

The Civil Rights Act of 1866

Front 28

Fair Housing Act expanded on the 1866 Civil Rights Act making it illegal to discriminate against:

Back 28

1. Race

2. Color

3. National Origin

4. Disability

5. Religion

6. Sex

7. Family status (children)

Front 29

Which law further expands the protection of the disabled

Back 29

Americans with Disability Act (ADA)

Front 30

Fair Housing Act exemptions, another words discrimination is acceptable if

Back 30

If a home is sold or rented by private owner without the use of a realtor

Front 31

Fair Housing Act exemption Discrimination is okay if

Back 31

Renting out a room or unit with no more than four independent units provided that the owner occupies one of the units

Front 32

Who can get away with discrimination

Back 32

Private clubs and organizations

Front 33

Does the fair housing act protect the elderly?

Back 33

No, that would be the Equal Credit Opportunity Act

Front 34

In the mortgage lending discrimination would include 6 items name three

Back 34

1. Refusing to make a mortgage loan

2. Refusing to provide information regarding loans

3. Imposing different terms or condition on a loan

Front 35

The next three mortgage lending discrimination include

Back 35

4. Discriminating in the appraisal of the property

5. Refusing to purchase a loan

6. Setting different terms or conditions for purchasing a loan

Front 36

Define what blockbusting is

Back 36

Trying to induce owners to sell their homes by suggesting that an ethnic or racial composition of the neighborhood is changing with the implication that property values will decline

Front 37

Define what's steering is

Back 37

It is channeling prospective real estate buyers or tenants to a particular neighborhood based on their race religion or ethnic background

Front 38

Define what redlining is

Back 38

It is a refusal to make a loans, or making loans of less favorable terms, on property located in a particular neighborhood for discrimination reasons

Front 39

Which act has the Equal Housing Opportunity logo

Back 39

Fair Housing Act

Front 40

Equal Credit Opportunity Act Regulation B (ECOAB) increased coverage of discrimination to:

Back 40

Age

Marital status

Receipt of income from Public Assistance programs

Front 41

The adequacy and stability of a borrower's income should be considered and not it's

Back 41

Source

Front 42

A lender must consider reliable alimony, child support, and separate maintenance payments as income. However the applicant is not...

Back 42

Required to disclose these types of income

Front 43

The applicant may not be asked if they are widowed or divorced the MLO must use these terms only

Back 43

Married

Unmarried

Separated

Front 44

What are dower or courtesy rights

Back 44

It is the interest in the real estate of a deceased spouse given by law to the surviving partner

Front 45

Creditors can consider the age of the applicant for credit under these circumstances

Back 45

1. Applicant is too young

2. Applicants age 62 or older are preferred reverse mortgage

3. It may be used to determine if income might drop because of pending retirement

4. Maybe used in a valid credit scoring system that favors applicants depending upon their age

Front 46

In determining creditworthiness ECOA requires that the applicant must at least be a

Back 46

Permanent Resident alien

Front 47

How many days does a creditor have after the receipt of a complete application to provide a credit decision

Back 47

30 days

Front 48

If the credit decision is adverse and other words they're declined the lender must do three things

Back 48

1. Notify them in writing

2. Provide and ECOA notice

3. Provide applicant with the specific principal reason

Front 49

If the lender does not provide the reason for the action taken the applicant has the right to request the reason within how many days

Back 49

60 days

Front 50

HMDA stands for what

Back 50

Home Mortgage disclosure Act

Front 51

What is the purpose of HMDA

Back 51

It allows the federal government to monitor under compliance with equal credit and housing laws

Front 52

Section X of the uniform residential loan application ask the borrow to supply the following data

Back 52

Ethnicity race and sex

Front 53

If the borrower refuses to give the information what is the interviewer required to do

Back 53

To provide the information based on visual observations and surname when the application is made in person

Front 54

HMDA does not apply two loans on

Back 54

1. Vacant land

2. New construction

3. Loans that are sold as a part of a pool for Servicing

Front 55

CRA Stands for

Back 55

Community Reinvestment Act

Front 56

The Purpose of CRA

Back 56

Encourage financial institutions to help meet the credit needs of communities in which they operate including low and moderate-income neighborhoods

Front 57

What is exclusionary zoning

Back 57

Any laws that have the effect of denying housing to minorities or other protected classes.

Front 58

What is desperate impact

Back 58

A law with desperate impact may be neutral on its face, but it has a discriminatory effect since it has a greater adverse impact on one group then on others

Front 59

Give an example of desperate impact

Back 59

Exclusionary zoning cases usually involve ordinances that prohibit or unreasonably restrict multi-family or low income housing. Since minorities are usually low income it would exclude them from certain communities

Front 60

What act puts a limitation on Advertising so that it cannot discriminate upon race or other protected classes

Back 60

Fair Housing Act

Front 61

What is the purpose of RESPA

Back 61

The purpose is to regulate settlement and closing procedures and to protect Borrowers

Front 62

If you receive a compensation for services actually rendered that are not based upon a referral does that violate respa

Back 62

No

Front 63

Is it a violation of respa for an employer to give a commission to its own employee for referral activities

Back 63

No

Front 64

it's not a violation of "required use" if the lender offers legitimate discounts with a combination of Settlement Services at a total price lower than the sum of the individual Settlement Services IF

Back 64

1. It is optional to the purchaser

2. Cost is not made up elsewhere in the settlement process

Front 65

Violation of Section 8 anti kickbacks may include

Back 65

1. Fines up to $10,000

2. Imprisonment up to one year

3. Restitution of three times the amount of the charge paid for

Front 66

Can an mlo be sued for an unintentional breach of legal Duty

Back 66

Yes it's called negligence

Front 67

What is Actual Fraud

Back 67

It is the intentional misrepresentation or concealment of a material fact

Front 68

What is Constructive Fraud?

Back 68

Negligent misrepresentation or concealment of a material fact. It's when false statements are made unintentionally. It is carelessness but does not have the intent to deceive

Front 69

Fraud for property is usually perpetrated by whom

Back 69

Borrowers

Front 70

Fraud for profit is usually perpetrated by who

Back 70

Industry Insiders

Front 71

List the three common ways fraud may be committed

Back 71

1. Material misrepresentations

(Altered pay check, tax returns)

2. Material misstatements

(Ower occupied but really a rental)

3. Omissions

(Taking retirement is 6 weeks)

Front 72

Give some examples of fraud that in MLO commit

Back 72

1. Ignoring derogatory information on a loan app

2. Not reporting all items on the HUD closing statement accurately

3. Creating Phantom documents for verification

4. Concealing the true nature of a borrow or scam payment

Front 73

What is a straw buyer

Back 73

It is someone who allows his name and personal details to be used to pay the mortgage loan for property in which he has no intentions of inhabiting (he may or may not be aware of it)

Front 74

If a broker makes a loan that should not have been made and then sells it on the secondary Market this is considered

Back 74

Fraud

Front 75

Define an inflated appraisal scheme

Back 75

It occurs when a property is intentionally appraised with a higher than market value by an appraiser acting in collusion with a real estate agent and mortgage broker or lender

Front 76

FHA will not insure a loan if the current owner...

Back 76

Not the one on the title

If it's between 91 and 180 days a second appraisal is a must

Front 77

Define what an air loan scam is

Back 77

One in which a loan is made on a non-existent property a straw buyer is used and fictional property as well as bogus references

Front 78

Define what a deed scam is

Back 78

the seller signature on the deed is forged meaning the real homeowner is not even aware the property is being fraudulently transferred.

Front 79

How is money acquired from a deed scam

Back 79

After the deed is recorded the thief mortgages the property with a cash-out refinancing and walks away with the money

Front 80

What is an unrecorded for silent second

Back 80

And it's a type of mortgage fraud in which the seller does not record the loan given to the borrower. And the borrower claims the down payment as his funds

Front 81

Describe what a disappearing second is

Back 81

When a buyer has no intention of paying the second mortgage back and the seller has no intentions of holding the buyer to the 2nd mortgage. The lender thinks that they have a lower loan-to-value but in reality it's 100% loan to value

Front 82

If a MLO is taking an application and thinks the social security number is false what should they do

Back 82

Continue taking the application, gather as much information on the borrower as possible then report it to the FTC or the IRS

Front 83

If a loan officer is taking an application with an older consumer and a third party but the older client seems to be confused what should be done?

Back 83

Go ahead take the application but then pull the Elder away privately to determine if they are being coerced

Front 84

An older person is being coerced to take out a mortgage and is under duress, what is the name for this

Back 84

Elder Abuse

Front 85

What is FERA

Back 85

Fraud Enforcement and Recovery Act

Front 86

What is the purpose of Fraud Enforcement Recovery Act

Back 86

It's a law that makes it a felony to falsify loan documents. Without it, the financial institution bribery statutes would not extend beyond traditional Banks and financial institutions

Front 87

What are the reports called that the FBI tracks mortgage fraud through

Back 87

Suspicious Activity Reports

Filed by HUD & Fed. Banks

Front 88

Penalties for mortgage fraud include

Back 88

Up to 1 million dollars and fines or imprisoned up to 30 years or both

Front 89

Define Predatory Lending

Back 89

Loans that take advantage of a poorly informed consumer through: excessively High fees; misrepresentative loan terms; frequent refinancing that does not benefit the borrower and other prohibited Acts

Front 90

Who created a rule that restricted MLO incentives to stop them from steering consumers two more expensive loans?

Back 90

The Board of Governors of the Federal Reserve System created Loan Originator Final Rule

Front 91

Title 14 of Dodd-Frank Act designated the ____ _______ ____ ____- _______ ______ ___ which gave CFPB authority to prohibit a MLO from steering consumers to loans they could not repay.

Back 91

Mortgage Reform and Anti- Predatory Lending Act

Front 92

Dodd-Frank section 1414 at TILA section 129 C which prohibits a creditor from financing what

Back 92

Premiums or fees for:

Credit Insurance, credit life, credit disability, credit unemployment, and credit property insurance

Front 93

What is the percentage amount that may be considered higher than normal and be a red flag for Junk fees

Back 93

4 to 5% of the loan amount

Front 94

Excessive fees can also be exorbitant _________ _______ that lock borrows into an abusive loan that cannot be easily refinanced

Back 94

Prepayment penalties

Front 95

Give example of equity skimming there are four

Back 95

1. Loans Exceeding Ability to Repay

2. Home Improvement Scam (contractor high repair cost sets up financing)

3. Loan Flipping (refinancing)

4. Extreem Lending (Lenders allow 50% of income to go to mort. Pmt)

Front 96

Give three examples of foreclosure rescue scams

Back 96

1. Phony counseling or Phantom help (scammer collects mort. pmts)

2. Rent to buy scheme (Terms make it impossible to buy home back)

3. Bait and switch (hidden surrender title document)

Front 97

6 Other predatory schemes by MLO's

Back 97

1. Encouraging borrowers to lie

2. Lending more money thing can be repaid

3. Charging High interest rates based on race

4. Pushing high-risk loans such as balloons

5. Targeting vulnerable borrowers for Cash-Out-Refinance

6. Multiple refinancings

Front 98

Describe it legal property flipping scheme

Back 98

When a property is purchased at a low price, appraised at an inflated value without any valid reason for the increase and then resold at a much higher price.