CompuCram Ethics Test 1 Flashcards

CompuCram Ethics Test 1 Flashcards What type of scam entails homeowners who are encouraged to refinance their property over and over until little or no equity remains?Loan Flipping [a type of equity skimming homeowners are encouraged to keep refinancing their property. Each time they refinance, they are charged points and closing costs, along with other fees. And each time, the equity gets smaller.] What word best describes a group of participants working together to commit single acts of mortgage fraud?Collusion [when a group of participants for example, appraisers, title companies, real estate agents, mortgage brokers or lenders, or even lawyers all work together to commit single acts of fraud.] What does Fannie Mae call the process of purchasing existing properties with the intention of immediately reselling the property for a profit?flipping. [This can be legal or illegal depending on how it is done.] What information would be EXEMPT from the privacy requirement of the Gramm-Leach-Bliley Act?1) Loan amount2) bank account info3)consumer credit score LOAN AMOUNT - [Information that the company believes to be lawfully public - such as mortgage loan information in a jurisdiction where that information is publicly recorded - is not restricted by the Gramm-Leach-Bliley Act.] What is NOT a protected class recognized by the Fair Housing Act?RECEIPT OF INCOME[Is protected under ECOA, but not the FHA] Which is LEAST LIKLEY to be an indicator of predatory lending?1) Falsifying docs2) increase interest rate charges on late payments3) requiring mortgage insurance Requiring mortgage insurance [does not indicate predatory lending.] Which of these federal regulations specifically prohibits discrimination in lending?ECOA [The Equal Credit Opportunity Act is a federal law that ensures that all consumers are given an equal chance to obtain credit.] What federal legislation specifically addresses the sharing of non-public information between financial institutions?Gramm-Leach-Bliley Act [sets specific guidelines for the sharing of confidential non-public information between financial institutions.] What does NOT fall under the jurisdiction of Title VIII of the Civil Rights Act?1) installment for a vehicle loan2)rental housing3)new construction Installment for a loan Vehicle [Fair Housing Act, Title VIII of the Civil Rights Act, governs all forms of housing, but not any type of personal property.] Which is an example of steering?Steering relates to buyers or renters and is defined as channeling prospective buyers or renters to or away from specific neighborhoods.Real estate agent Ike tells mortgage broker Tina that he will send her all of his clients if she'll give him $100 for each loan she closes. Although Tina turns him down, she does decide to send Ike tickets to a football game to thank him for referring his clients any way and he accepted them.According to Section 8 of RESPA,1) ike is in violation2) Tina is in violation3) both are in violation BOTH [RESPA considers anyone who initiated, paid, or accepted a kickback to be in violation.]

Which is LEAST LIKELY to be an example of illegal flipping?1) Remodeling and flipping2) inflated appraisal3) one property with a group of sellers and buyers changing ownership among themselves

Answer: remodel and flip [which is PERFECTLY LEGAL.

The illegal side of flipping is when colluding parties profit from the sale of property with an inflated appraisal that supports a loan. It may involve a series of sales and quick resales, with one property and a group of sellers and buyers changing ownership among them.] Which act was passed to address the illegal practice of redlining?CRA [Community Reinvestment Act was intended to eliminate the practice of redlining by requiring lenders to make loans in the neighborhoods in which they do business.] Which federal legislation prohibits kickbacks and referral fees?RESPA [The Real Estate Settlement Procedures Act (RESPA) specifically prohibits kickbacks, referral fees, and fee splitting.] When an appraiser "gives a mortgage loan originator what's needed" on the appraisal report, the consumer usually ends up CONSUMER BORROWS TOO MUCH resulting in an up-side-down loan Under the Fair Housing Act, which activity is NOT deemed illegal?1) steering2) adverse action2) redlining Adverse action, [such as denying a loan, is not illegal if the borrower is not credit-worthy.] What federal legislation requires that all printed advertising include the Equal Housing Opportunity logo?FHA [requires that the Equal Housing Opportunity logo be displayed in all printed material and the term "equal housing lender" must be used when broadcast over the airwaves.] What is another name for blockbusting, an illegal activity, according to the Fair Housing Act?PANIC SELLING [This is when a homeowner panics due to someone causing fear regarding changes in the neighborhood, which leads them to thinking they need to sell before the neighborhood "goes down."] What law prohibits discrimination in the sale and rental of a residential property on the basis of race, color, religion, handicap, sex, familial status or national origin?FHA [prohibits discrimination against renting and selling property] What federal legislation requires the term "equal housing lender" to be used in any advertisement that is broadcast over the airwaves?FHA [Fair Housing Act requires the use of the phrase "equal housing lender" in all broadcast advertising and the use of the Equal Housing Opportunity logo in all print ads.]