A borrower's employment verification shows they started a new job three weeks ago with a $95,000 annual salary, but their previous tax returns show unemployment benefits for the past 18 months. The employer is a recently formed LLC with the same address as the borrower's residence. What is the primary concern?
Correct Answer
B) Potential employment fraud involving a shell company
The combination of a newly formed employer at the borrower's address, recent employment after extended unemployment, and high salary suggests potential employment fraud using a shell company. This arrangement allows fabrication of employment and income documentation.
Why This Is the Correct Answer
The combination of a newly formed employer at the borrower's address, recent employment after extended unemployment, and high salary suggests potential employment fraud using a shell company. This arrangement allows fabrication of employment and income documentation.
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:
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A borrower asks an MLO to recommend a specific appraiser who they know will 'be flexible' with the property value. The MLO knows this appraiser has a reputation for inflated appraisals. What should the MLO do?