Red Flags of Fraud

An individual is serving as a ___________ when he or she accepts a fee for allowing another borrower to use his or her name, other personal identifying information, and credit information to secure a loan. A. Cosigner B. Guarantor C. Straw buyer D. Straw seller

C

The primary purpose of the Red Flags Rule is to: A. Safeguard the security of nonpublic personal information B. Protect the privacy of nonpublic personal information in the disposal process C. Provide immediate alerts to the FBI and reports to the FTC of incidents of identity theft D. Establish standards for a system to detect identity theft and to mitigate its effects

D

Which of the following is not likely a sign of identity theft? A. A Social Security Number has 00 as the middle two digits B. The credit history does not match the applicant's stated residential history C. Identification documents feature slightly smeared ink in some places D. A Social Security Number has 00 as the first two digits

D

Which of the following would not be considered a red flag? A. A sudden increase in the volume of credit inquiries B. A loan applicant with multiple W-2s C. A significant change in the use of credit, particularly regarding new accounts D. A high number of recently-established credit accounts

B

The Red Flags Rule was written by the __________.

FTC

Identity theft prevention programs must be periodically updated to identify and address new __________.

risks

The Red Flags Rule requires the establishment of: A. Identity theft prevention programs B. Sufficient information disposal methods C. Internal compliance assurance task forces D. Money laundering alert systems

A

To assist financial institutions and creditors with the creation of identity theft programs, the Red Flags Rule includes: A. Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation B. The Safeguards Rule and the Disposal Rule C. Rules for the Prevention and Deterrence of Identity Theft and Assumption D. The Fair and Accurate Credit Transactions Rule

A

This is a fraudulent act carried out by forcing the sale of a home for less than it is worth, only to resell the home later at its true (higher) value. A. Property flipping B. Property flopping C. Straw buying D. Straw selling

B

This type of fraud involves the conspiratorial involvement of unscrupulous individuals from all sectors of the mortgage industry. A. Fraud for housing B. Fraud for profit C. Air loan fraud D. Cooperative insider fraud

B

Total net adjustments of more than ____ could be a sign of fraud on a property appraisal. A. 25% B. 15% C. 20% D. 18%

B

Under the Red Flags Rule, a person who has a covered account with a financial institution is known as a: A. Consumer B. Client C. Customer D. Creditor

C

Under the Red Flags Rule, financial institutions and creditors that offer or maintain covered accounts must comply with two basic requirements, which are to: A. Have an identity theft prevention program in place and notify the FTC of any incidents of identity theft B. Have an identity theft prevention program in place and notify the FBI of any incidents of identity theft C. Periodically determine if it offers or maintains covered accounts and establish an identity theft prevention program D. Establish an identity theft prevention program and perform an annual audit of each covered account to determine if identity theft has occurred

C

All of the following is an indication that a mortgage lending transaction may be fraudulent, except: A. A mismatch between the age of the property securing the loan and the comparables used B. The borrower signs a loan agreement with blank spaces on it C. Income that is not consistent with the loan applicant's age or education D. The borrower submits a simultaneous application for a mortgage to purchase a home and a second mortgage to secure a home equity line of credit with the same lender

D

At the state level, who may receive referrals of mortgage fraud cases from state regulators? A. The Secretary of State B. The State Senate C. The State's Anti-Fraud Task Force D. The State Attorney General

D

A __________ under the Red Flags Rule is any person who has a covered account with a financial institution or a creditor.

customer

The Red Flags Rule requires establishment of an identity theft prevention __________.

program