Chapter 13 Section 6

Question 1

foreclosure rescue schemes

Answer 1

-fraudster may contact homeowner in the beginning stages of foreclosure, present themselves as intermediaries, and offer to eliminate the debt and save the house for a fee
-fraudster collects the fee and disappears without providing any real assistance to the homeowner

Question 2

borrower identity theft

Answer 2

-a fraudster unlawfully uses someone else’s personal information, such as name, address, and social security number to obtain a mortgage

Question 3

reverse mortgage scams

Answer 3

-elderly homeowners can be taken advantage of due to the complexity of the reverse mortgage process
-fraudsters may charge extra fees or insist on additional requirements that are not necessary

Question 4

straw borrowers

Answer 4

-either an individual whose identity is concealed knowingly or unknowingly (identity theft)
-the straw borrower is often paid to allow someone else to use their credit profile to obtain a mortgage

Question 5

house flipping

Answer 5

-most fraudulent flipping is based on appraisal fraud

Question 6

no document loans

Answer 6

-a loan in which the borrower provides very little information to qualify for a loan

Question 7

mortgage fraud red flags

Answer 7

-unsolicited offers from individuals claiming to be mortgage representatives
-upfront fees for services
-requests to make mortgage payments directly to a foreclosure service company
-requests for a quitclaim deed to transfer interest in the property
-names have been added or deleted from the sales contract
-requests to sign incomplete loan documents
-inflated appraisals
-inflated contract prices

Question 8

Equal Credit Opportunity Act (ECOA)

Answer 8

-requires lenders to judge every loan applicant on the basis of the applicant’s credit rating and income

Question 9

Real Estate Settlement Procedures Act (RESPA)

Answer 9

-requiring lenders to provide a loan estimate of settlement costs no later than 3 business days following the date of the mortgage loan application
-requiring each loan applicant to be provided with the information booklet
-requiring that a closing disclosure be completed and provided to the borrower no later than three business days prior to closing
-prohibiting kickbacks and rebates on any transaction regulated under the provisions of RESPA
-requiring a mortgage servicing disclosure statement that discloses to the borrower whether the lender intends to service the loan or transfer it to another lender

Question 10

Truth in Lending Act (TILA)

Answer 10

-enacted to assure that consumers receive meaningful information concerning the true cost of credit

Question 11

triggering terms

Answer 11

-if an advertisement contains any one of the terms specified in the TILA then that advertisement must also include three prescribed disclosures
-triggering terms:
-amount of the down payment
-amount of any payment
-number of payments
-period of repayment
-amount of any finance charge