A borrower refinances their mortgage four times in two years, each time with higher fees and closing costs totaling $15,000, but with no significant benefit such as rate reduction or cash out. The loan originator generated substantial commission income from these transactions. This pattern suggests:
Correct Answer
B) Loan flipping
This scenario clearly demonstrates loan flipping - repeated refinancing within a short timeframe that primarily benefits the lender through fees and commissions rather than providing tangible benefits to the borrower. The pattern of frequent refinancing with high costs but no borrower benefit is the defining characteristic of predatory loan flipping.
Why This Is the Correct Answer
This scenario clearly demonstrates loan flipping - repeated refinancing within a short timeframe that primarily benefits the lender through fees and commissions rather than providing tangible benefits to the borrower. The pattern of frequent refinancing with high costs but no borrower benefit is the defining characteristic of predatory loan flipping.
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Under the Do-Not-Call Registry rules, what is the maximum penalty per violation that can be imposed on mortgage loan originators for calling consumers on the National Do-Not-Call Registry?
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An MLO discovers their employer is systematically charging higher rates to minority borrowers. The MLO's appropriate response is to: