Mortgage Fraud Types Quiz

Play an AI-generated podcast conversation about this lesson

What is the most common type of fraud that occurs when an individual wishes to purchase a home with no intent to abscond with mortgage funds or fraudulently sell the property?

Property misrepresentation for tax benefits

Overstating liabilities on the mortgage application

Income inflation to obtain mortgage financing (correct)

False employment history to secure a mortgage

What is the impact of mortgage fraud on the Mortgage Brokerage industry?

Reduction in vulnerability to fraud

Increase in mortgage products offered

Scaling back products due to high fraud vulnerability (correct)

Decrease in fraudulent loan applications

Which step can a Mortgage Agent take to assist in mortgage fraud prevention?

Skipping employment and income verification

Avoiding identity verification

Conducting identity, employment, and income verification (correct)

Neglecting credit and property verification

What is a common warning sign of identity fraud according to the content?

Quality of identification not genuine Signup and view all the answers

In what percentage of cases does Fannie Mae report misstatements about liabilities as a factual misstatement under fraud for shelter?

71% Signup and view all the answers

How does mortgage fraud harm the Borrower?

Leads to financial hardships due to unaffordable mortgage Signup and view all the answers

What is considered a warning sign related to the applicant's employment and income?

Inconsistencies between the job letter and pay stubs Signup and view all the answers

Why is it important for the Mortgage Agent to verify the directory listing for the applicant's business?

To confirm if the business exists Signup and view all the answers

What might be a reason for a client insisting on meeting at a location other than the property to be mortgaged?

Convenience Signup and view all the answers

Why is it concerning if an applicant claims to have significant income but lacks assets?

It may indicate financial instability Signup and view all the answers

What action should the Mortgage Agent take if an applicant provides only a cellular phone for contact?

Request a recent utility bill with the applicant's address and name Signup and view all the answers

How can inconsistencies in an applicant's job letter affect their mortgage application?

Affect the loan interest rate Signup and view all the answers

How does the Land Titles Assurance Fund assist homeowners who are victims of fraud?

By providing compensation for financial losses due to land registration errors or omissions Signup and view all the answers

What is a recommended way for consumers to protect themselves from fraud?

Obtaining title insurance for every property purchased Signup and view all the answers

Why is it advised to destroy all personally identifiable documents using a paper shredder?

To prevent criminals from impersonating based on information obtained Signup and view all the answers

What purpose does a home inspection serve for a buyer of a resale home?

To ensure the house was never used as a grow op or drug lab Signup and view all the answers

Why should consumers strive to withdraw cash only from their bank’s ATMs?

To prevent debit card and PIN information theft Signup and view all the answers

In what circumstances have some ATMs outside banks been compromised?

In small gas stations or other stores Signup and view all the answers

What is one of the recommendations for consumers regarding passwords?

Use unique passwords Signup and view all the answers

What have default insurers done to prevent mortgage fraud?

Published materials and conducted seminars on fraud prevention Signup and view all the answers

How has FSRA assisted the industry in preventing fraud?

Created industry checklists and updated licensing requirements Signup and view all the answers

Where can the anti-fraud resources developed by MBRCC be found?

At <a href="https://www.mbrcc.ca/Anti-FraudResourcesforIndustry">https://www.mbrcc.ca/Anti-FraudResourcesforIndustry</a> Signup and view all the answers

Which of the following is a warning sign of mortgage fraud related to an applicant's assets?

Applicant states significant income but little or no assets Signup and view all the answers

What is recommended for consumers to do with written password information?

Lock it in a secure place Signup and view all the answers

What is a red flag related to the source of down payment according to the text?

Earnest/deposit money isn’t reflected in account withdrawals Signup and view all the answers

Which behavior indicates a lack of loyalty to traditional banking institutions?

Bank statements with unusual dates or out of sequence Signup and view all the answers

What step does OSFI mandate for its regulated entities to prevent fraud?

Conducting income verification and employment status checks Signup and view all the answers

What is a concerning behavior related to the source of earnest/deposit money?

Recently deposited funds without a plausible paper-trail Signup and view all the answers

Which action is NOT suggested by OSFI guidelines to prevent fraud?

Encouraging applicants to maintain excessive checking account balances Signup and view all the answers

What scenario could raise suspicion related to bank statements according to the text?

Dates of bank statements that are unusual or out of sequence Signup and view all the answers