A property appraisal includes comparable sales that are all located more than 5 miles away from the subject property, despite several recent sales within 1 mile. The appraiser notes 'no suitable comparables in immediate area.' This suggests:
Correct Answer
C) Potential cherry-picking of comparables to support a predetermined value
When an appraiser bypasses closer, recent sales without adequate justification, it may indicate manipulation to support a predetermined value. USPAP requires appraisers to use the most comparable and proximate sales available, and this pattern suggests potential appraisal fraud.
Why This Is the Correct Answer
When an appraiser bypasses closer, recent sales without adequate justification, it may indicate manipulation to support a predetermined value. USPAP requires appraisers to use the most comparable and proximate sales available, and this pattern suggests potential appraisal fraud.
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:
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:
A borrower admits to an MLO that they inflated their income on the initial application but wants to provide correct information now. What should the MLO do?
An MLO's family member works as an appraiser and occasionally appraises properties for the MLO's borrowers through the normal appraisal management company rotation. The MLO never requests this appraiser specifically. Is this arrangement problematic?
During a fair lending examination, regulators discover that a bank's loan officers receive higher commissions for loans with interest rates above 6%, and statistical analysis shows borrowers in predominantly minority neighborhoods receive these higher-rate loans more frequently. This compensation structure would MOST likely be viewed as:
An MLO discovers a borrower has refinanced with three different lenders in the past two years, each time increasing the loan balance and paying substantial fees. The borrower mentions they were told each refinance would 'improve their financial situation.' The MLO's appropriate response should be:
An appraisal comes back significantly higher than the contract price with no reasonable explanation. The loan officer should:
An MLO's advertisement includes the statement 'Payments as low as $500 per month.' What additional disclosures are required under TILA?
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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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An MLO presents a loan estimate showing a base loan amount of $180,000, but the final loan documents show $195,000 with the difference attributed to 'closing cost financing' that includes $8,000 in credit insurance products the borrower doesn't recall discussing. The borrower signed the initial application but not specific product authorizations. This scenario primarily involves: