A borrower's credit report shows recent inquiries from multiple lenders, but the borrower claims they have not applied for other loans. This could indicate:
Correct Answer
B) Identity theft
Multiple recent credit inquiries that the borrower cannot explain or denies making is a red flag for identity theft. Someone may be using the borrower's personal information to apply for credit elsewhere. The Fair Credit Reporting Act requires investigation of such discrepancies.
Why This Is the Correct Answer
Multiple recent credit inquiries that the borrower cannot explain or denies making is a red flag for identity theft. Someone may be using the borrower's personal information to apply for credit elsewhere. The Fair Credit Reporting Act requires investigation of such discrepancies.
More Ethics & Fraud Questions
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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?
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Previous Question
A mortgage company requires borrowers to purchase a specific type of credit monitoring service as a condition of loan approval, claiming it's necessary for 'ongoing creditworthiness verification.' The service costs $25 monthly and provides no material benefit to the borrower's mortgage. This practice is most likely:
Next Question
A lender's fair lending review discovers that their loan officers consistently require additional income verification from borrowers with foreign-sounding names, even when these borrowers are U.S. citizens with established credit histories. This practice would constitute: