A borrower provides a power of attorney document that appears legitimate, but the MLO later discovers the person granting the power of attorney claims they never signed it. However, the transaction has not yet closed. What is the immediate priority?
Correct Answer
B) Halt the transaction and begin internal fraud reporting procedures
When potential fraud is discovered, especially involving forged legal documents like powers of attorney, the transaction must be halted immediately and internal fraud reporting procedures must begin. This protects both the institution and prevents facilitation of potential fraud. BSA requires prompt action when suspicious activity is detected.
Why This Is the Correct Answer
When potential fraud is discovered, especially involving forged legal documents like powers of attorney, the transaction must be halted immediately and internal fraud reporting procedures must begin. This protects both the institution and prevents facilitation of potential fraud. BSA requires prompt action when suspicious activity is detected.
More Ethics & Fraud Questions
A lender's mobile app prominently displays a 'pre-qualification' feature that asks for minimal information but generates loan amount estimates that are consistently 20-30% higher than what borrowers actually qualify for when they complete full applications. The app includes a disclaimer that estimates are 'subject to full underwriting.' This practice is most likely:
An MLO discovers that multiple loan applications from different borrowers contain identical handwriting in the signature sections, despite different purported signers. The applications were submitted by different real estate agents. What is the most appropriate immediate action?
A mortgage loan originator receives a lead from a real estate agent about a potential borrower. Before calling this consumer, the MLO must:
An MLO tells Asian applicants that they need larger down payments 'because that's what investors prefer for your type of loan,' while telling similarly qualified white applicants that standard down payments are acceptable. This practice represents:
A mortgage company advertises 'Guaranteed approval for all credit types!' but internally has minimum credit score requirements of 580. This advertisement is problematic because it:
People Also Study
Federal Mortgage-Related Laws
23% of exam
General Mortgage Knowledge
23% of exam
Mortgage Loan Origination Activities
25% of exam
Uniform State Test Content
12% of exam
Previous Question
During the application process, an MLO tells a borrower that their interest rate is 'locked and guaranteed' for 60 days, but the actual rate lock agreement contains standard market volatility exceptions that could allow rate increases. The borrower doesn't read the rate lock document carefully. This situation represents:
Next Question
An MLO is approached by a borrower who wants to purchase a home from the MLO's business partner in a separate real estate investment company. The MLO has no direct financial interest in the specific property. What should the MLO do?