Chapter 5 Flashcards
(40 cards)
What is the primary purpose of RESPA Section 8?
To eliminate kickbacks, referral fees, and unearned fees that unnecessarily increase settlement service costs.
Chapter 5, p. 168
What are the three elements of an illegal kickback under RESPA?
1) A thing of value, 2) an agreement or understanding, and 3) a referral.
Chapter 5, p. 169
What is considered a ‘thing of value’ under RESPA Section 8?
Includes monetary compensation, services, gifts, or anything benefiting a referral source.
Chapter 5, p. 169
Are charitable contributions exempt from RESPA’s rules on kickbacks?
No, charitable contributions are not exempt from scrutiny under RESPA.
Chapter 5, p. 169
What does Regulation Z prohibit in advertisements for closed-end loans?
Misleading claims, such as ‘fixed rates’ for adjustable loans or government endorsement claims.
Chapter 5, p. 175
What are the protected classes under ECOA and the FH Act?
Race, color, religion, national origin, sex, marital status, familial status, age, disability, and receipt of public assistance.
Chapter 5, p. 172
What is overt evidence of discrimination?
When a lender explicitly discriminates or expresses discriminatory preferences.
Chapter 5, p. 172
What is disparate treatment in lending?
When a lender treats applicants differently based on prohibited factors, regardless of intent.
Chapter 5, p. 172
What is disparate impact?
When a neutral policy disproportionately affects a protected group without justification.
Chapter 5, p. 173
What is redlining?
The illegal practice of denying or limiting credit in certain neighborhoods based on prohibited factors like race or national origin.
Chapter 5, p. 173
What are the penalties for violating RESPA Section 8?
Fines up to $10,000, one year in prison, or both, per violation.
Chapter 5, p. 168
What does the Fraud Enforcement and Recovery Act (FERA) of 2009 do?
Expands federal authority to prosecute mortgage fraud with penalties up to 30 years in prison or $1 million in fines.
Chapter 5, p. 177
What is churning in mortgage fraud?
Excessive refinancing activity to generate fees and commissions without benefiting the borrower.
Chapter 5, p. 176
What is chunking in mortgage fraud?
Convincing a borrower to invest in multiple properties without their knowledge of multiple loans being taken out.
Chapter 5, p. 176
What is a straw buyer?
A person used to purchase a property on behalf of someone else to hide the true buyer’s identity.
Chapter 5, p. 176
What is equity theft?
Fraudsters forge documents to obtain loans on a property, leaving the homeowner unaware until foreclosure occurs.
Chapter 5, p. 176
What is a foreclosure rescue scam?
Fraudsters deceive homeowners into signing over their property with false promises to avoid foreclosure.
Chapter 5, p. 176
What are the signs of mortgage fraud in loan applications?
Unrealistic commutes, inconsistent borrower information, and unusual down payment sources.
Chapter 5, p. 177
What are red flags in credit reports for mortgage fraud?
No credit history, recent Social Security numbers, and liabilities not disclosed on the loan application.
Chapter 5, p. 177
What are signs of fraud in employment verification?
Handwritten pay stubs, employer addresses matching borrower addresses, or unrealistic YTD earnings.
Chapter 5, p. 177
What is the definition of fraud for housing?
Misrepresentation by a borrower to qualify for a loan, intending to make payments but falsifying information.
Chapter 5, p. 175
What is fraud for profit?
Fraud involving elaborate schemes to gain illicit proceeds, often through misrepresentation in appraisals or loan documents.
Chapter 5, p. 175
What is Regulation Z’s restriction on misleading use of the term ‘counselor’?
Advertisements cannot imply the lender is a counselor unless they are accredited in that role.
Chapter 5, p. 175
How does Regulation Z address misleading government endorsements?
Prohibits claiming products are government-endorsed if they are not.
Chapter 5, p. 175
