RMLO Exam Study Guide- Questions &
Answers
FERA Origination Schemes Correct Ans--Fraudulently inflated appraisals- get over valued
appraisal to generate false equity to abscond $-
- Illegal property flipping- buying house low & getting an inflated appraisal to sell it high (didn't
put improvement work into it and market can't change that fast)
- Assignment fee- using this fee to divert/hide illegal $ gained from mortgage fraud
- Real estate investment- fraudsters have investors purchase properties at inflated prices
- Seller assistance-fraudster offers to find buyer for house, inflates value, gives seller the asking
price & pockets left over amount as "servicing fee" (if borrower defaults, lender can' t get $ back
on loan)
- Builder bailout- builder inflates selling price of house so that loan amount covers their cost
even without a down payment. Then finds buyer to buy home at that price and forgives down
payment without lender knowing (so lender funded 100% LTV and there is no equity in home)
FERA Origination Schemes Correct Ans--HELOC-fraudster draws out all of HELOC really
quickly
- HELOC bust out- fraudster withdraws full limit of HELOC, then sends lender a fraudulent check
to pay it. Fraudster then quickly withdraws check amount form HELOC before lender realizes
check was worthless(so they now owe lender more than the HELOC limit)
,- HELOC/double funded loan/multiple loan scheme- LOs require applicant to sign multiple
copies of application & send to multiple lenders. LO alters/forges closing documents &takes off
with all the extra $ from the other lenders or someone takes out multiple HELOCs from different
lenders at once (takes days/months for liens recording & lenders unaware till later that they are
lowerslot)
FERA Originations Schemes Correct Ans-HECM-fraudster recruits seniors and steal their
money through equity theft
- Foreclosure rescue- convinces homeowner they can stop foreclosure through deed transfer or
upfront fees. Fraudster allow the homeowner to pay them mortgage payments while fraudster
sells home or takes out more loans w/o homeowner's knowledge
- Debt elimination- homeowner pays upfront fee for debt elimination. Fraudsters then
persuade creditors to discharge the debts resulting in foreclosure, increased debt, ruined credit
- Equity skimming- fraudsters drain all equity out of property by getting homeowner to take out
multiple loans/HELOCS and use funds to invest in various schemes
- Short sale- fraudster gets straw buyer to purchase home and default on payments. Fraudster
then offers to buy home from lender prior to foreclosure sale for significantly less than what is
owed
- Silent 2nd- Waiting till after senior lien goes through to disclose (borrowing down payment)
FERA Origination Schemes Correct Ans-Red flags- -Application-
- Unsigned/undated/ POA use or signature illegible with no identification
- Borrower won't sign in individual capacity - No price/date of purchase
- Applicant selling current home but has no supporting documents
,- Down payment not in cash - High income but no personal property
- Age/income /education not consistent with years employed/profession or employer is far
away
- Too much assets for income
- Claims no debt
- Owns excessive amount of real estate
- New housing expense >150% of current housing expense
- PO box for employer, or employer's phone is same as applicants
- Application date and verification form dates not consistent
- Certain broker too active for current market or similarities from applications for specific
seller/broker
FERA Origination Schemes Correct Ans--Credit report-
- All reports not in file
- Data not consistent with application
- SSN invalid, recently issued, or differs from application - Employment not verified or is
different from app - No credit
- All credit opened recently or at same time or paid off at same time
- Credit inconsistent with income or age
- Refinance of recent loan (debt may have been accelerated due to misrepresentation
- AKA/DBA
- Recent inquiries or credit report if from another lender - Hawk alerts
, Application lists debt in same order as report
- Additional debt shown on closing date
FERA Origination Schemes Correct Ans-Employment/Income verification-
- Handwritten info ( paystub, VOE, W2 company or employee name)
- Large employer but check stubs not preprinted
- Check #s for payroll checks not in order
- Any info of employer being similar to anyone in transaction
- Date of hire was weekend/holiday
- YTD earnings don't match w2 or stubs or is an even amount
- Deletions/cross outs/squeezed in #s
FERA Origination Schemes Correct Ans--Sales Contract-
- Borrower not shown as purchaser
- Names added or deleted
- Seller is realtor, relative or employer
- Earnest money is entire down payment or an odd amount
- Sales price too low
- Second mortgage listed
- No realtor involved
- Name and address on earnest $ check isn't borrower's, have inconsistent dates, or hasn't been
cashed
Answers
FERA Origination Schemes Correct Ans--Fraudulently inflated appraisals- get over valued
appraisal to generate false equity to abscond $-
- Illegal property flipping- buying house low & getting an inflated appraisal to sell it high (didn't
put improvement work into it and market can't change that fast)
- Assignment fee- using this fee to divert/hide illegal $ gained from mortgage fraud
- Real estate investment- fraudsters have investors purchase properties at inflated prices
- Seller assistance-fraudster offers to find buyer for house, inflates value, gives seller the asking
price & pockets left over amount as "servicing fee" (if borrower defaults, lender can' t get $ back
on loan)
- Builder bailout- builder inflates selling price of house so that loan amount covers their cost
even without a down payment. Then finds buyer to buy home at that price and forgives down
payment without lender knowing (so lender funded 100% LTV and there is no equity in home)
FERA Origination Schemes Correct Ans--HELOC-fraudster draws out all of HELOC really
quickly
- HELOC bust out- fraudster withdraws full limit of HELOC, then sends lender a fraudulent check
to pay it. Fraudster then quickly withdraws check amount form HELOC before lender realizes
check was worthless(so they now owe lender more than the HELOC limit)
,- HELOC/double funded loan/multiple loan scheme- LOs require applicant to sign multiple
copies of application & send to multiple lenders. LO alters/forges closing documents &takes off
with all the extra $ from the other lenders or someone takes out multiple HELOCs from different
lenders at once (takes days/months for liens recording & lenders unaware till later that they are
lowerslot)
FERA Originations Schemes Correct Ans-HECM-fraudster recruits seniors and steal their
money through equity theft
- Foreclosure rescue- convinces homeowner they can stop foreclosure through deed transfer or
upfront fees. Fraudster allow the homeowner to pay them mortgage payments while fraudster
sells home or takes out more loans w/o homeowner's knowledge
- Debt elimination- homeowner pays upfront fee for debt elimination. Fraudsters then
persuade creditors to discharge the debts resulting in foreclosure, increased debt, ruined credit
- Equity skimming- fraudsters drain all equity out of property by getting homeowner to take out
multiple loans/HELOCS and use funds to invest in various schemes
- Short sale- fraudster gets straw buyer to purchase home and default on payments. Fraudster
then offers to buy home from lender prior to foreclosure sale for significantly less than what is
owed
- Silent 2nd- Waiting till after senior lien goes through to disclose (borrowing down payment)
FERA Origination Schemes Correct Ans-Red flags- -Application-
- Unsigned/undated/ POA use or signature illegible with no identification
- Borrower won't sign in individual capacity - No price/date of purchase
- Applicant selling current home but has no supporting documents
,- Down payment not in cash - High income but no personal property
- Age/income /education not consistent with years employed/profession or employer is far
away
- Too much assets for income
- Claims no debt
- Owns excessive amount of real estate
- New housing expense >150% of current housing expense
- PO box for employer, or employer's phone is same as applicants
- Application date and verification form dates not consistent
- Certain broker too active for current market or similarities from applications for specific
seller/broker
FERA Origination Schemes Correct Ans--Credit report-
- All reports not in file
- Data not consistent with application
- SSN invalid, recently issued, or differs from application - Employment not verified or is
different from app - No credit
- All credit opened recently or at same time or paid off at same time
- Credit inconsistent with income or age
- Refinance of recent loan (debt may have been accelerated due to misrepresentation
- AKA/DBA
- Recent inquiries or credit report if from another lender - Hawk alerts
, Application lists debt in same order as report
- Additional debt shown on closing date
FERA Origination Schemes Correct Ans-Employment/Income verification-
- Handwritten info ( paystub, VOE, W2 company or employee name)
- Large employer but check stubs not preprinted
- Check #s for payroll checks not in order
- Any info of employer being similar to anyone in transaction
- Date of hire was weekend/holiday
- YTD earnings don't match w2 or stubs or is an even amount
- Deletions/cross outs/squeezed in #s
FERA Origination Schemes Correct Ans--Sales Contract-
- Borrower not shown as purchaser
- Names added or deleted
- Seller is realtor, relative or employer
- Earnest money is entire down payment or an odd amount
- Sales price too low
- Second mortgage listed
- No realtor involved
- Name and address on earnest $ check isn't borrower's, have inconsistent dates, or hasn't been
cashed
