Mortgage fraud red flags, predatory lending practices, and consumer protection concepts tested on the SAFE Act exam.
30 cards · basic cards · AI-written, checked twice. Edit anything.
- What is the SAFE Act?
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Federal law requiring states to license mortgage loan originators and establish licensing standards- What is a yield-spread premium?
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Compensation paid to a loan originator for offering a borrower a mortgage rate higher than the market rate- Bait-and-switch in mortgage fraud involves what?
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Quoting a low rate or favorable terms to attract a borrower, then increasing them at closing- What is a prepayment penalty?
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A fee charged to the borrower for paying off the loan balance before the maturity date- Define predatory lending.
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Unfair or deceptive lending practices that exploit borrowers through unreasonable terms or lack of transparency- What is negative amortization?
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Monthly payment does not cover accrued interest, causing the principal balance to increase over time- What is the three-day cooling-off period?
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Federal right allowing a borrower to cancel a mortgage transaction within three business days of closing without penalty- Fee packing in predatory lending means what?
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Adding unnecessary products or fees to a loan without clear borrower knowledge or consent- What do the TRID rules require?
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Lenders must provide a Loan Estimate within three business days and a Closing Disclosure three days before closing- What is steering a borrower?
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Directing a borrower toward less favorable loan terms or products based on protected characteristics- What is the NMLS?
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Nationwide Multistate Licensing System tracking and regulating licensed mortgage loan originators- What is loan flipping?
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Repeatedly refinancing a borrower's loan to generate origination fees without clear financial benefit to the borrower- When must a risk-based pricing notice be provided?
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When a borrower receives a rate or terms less favorable than the lender's best offer based on credit score or history- What is an inflated appraisal fraud?
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Overstating a property value to justify a larger loan amount than the property actually supports- What does the ability-to-repay rule require?
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Lenders must verify that borrowers have the income and financial capacity to make scheduled loan payments
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