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P5-18 Quiz

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Question 1 of 14

1. Question
Which of the following is a red flag during mortgage application review?
- A) Minor address updates
- B) Significant or contradictory changes between the initial and final application
- C) Clarification of employment start date
- D) Reduced loan amount
Correct

Incorrect
Question 2 of 14

2. Question
Why is an unsigned or undated application a red flag?
- A) It may indicate fraud or intentional omission
- B) It delays closing
- C) It prevents appraisal review
- D) It violates RESPA rules
Correct

Incorrect
Question 3 of 14

3. Question
Why is an employer address listed only as a P.O. Box a red flag?
- A) Employer recently relocated
- B) Indicates a government employer
- C) Employer may be unverifiable or fabricated
- D) Taxes were not withheld
Correct

Incorrect
Question 4 of 14

4. Question
Why is a cash-out refinance on a recently acquired property a red flag?
- A) Borrower wants lower rate
- B) Mortgage insurance must be removed
- C) GSEs prohibit all cash-outs
- D) It may indicate inflated value or property flipping
Correct

Incorrect
Question 5 of 14

5. Question
Why is a buyer currently residing in the subject property a red flag?
- A) It violates appraisal rules
- B) It may indicate a non-arm’s length relationship
- C) Buyer lacks representation
- D) It reduces concessions
Correct

Incorrect
Question 6 of 14

6. Question
Why is sharing the same phone number for applicant and employer a fraud concern?
- A) It causes documentation delays
- B) Indicates outdated employer contact
- C) Violates underwriting overlays
- D) May indicate falsified employment information
Correct

Incorrect
Question 7 of 14

7. Question
Extreme payment shock may indicate:
- A) Borrower relocating
- B) Property tax escalation
- C) Straw buyer activity or inflated income
- D) Payment restructuring
Correct

Incorrect
Question 8 of 14

8. Question
Why is a purchaser of investment property who does not own a residence a red flag?
- A) It may indicate occupancy misrepresentation
- B) Suggests weak credit
- C) Violates FHA rules
- D) Reduces concessions
Correct

Incorrect
Question 9 of 14

9. Question
Which statement best describes acceptable employment verification?
- A) Only written VOEs allowed
- B) Only verbal VOEs allowed
- C) Either verbal or written VOE is acceptable
- D) VOEs optional with 740+ credit score
Correct

Incorrect
Question 10 of 14

10. Question
Which satisfies standard income documentation requirements?
- A) One paystub and one W-2
- B) 30-day YTD paystub plus two years of W-2s
- C) Two years of bank statements
- D) Borrower handwritten note
Correct

Incorrect
Question 11 of 14

11. Question
Which documentation satisfies asset verification requirements?
- A) One month of credit card statements
- B) Employer benefit statements
- C) Verbal confirmation of assets
- D) Two months of bank statements or verified account summaries
Correct

Incorrect
Question 12 of 14

12. Question
How are borrower liabilities typically verified?
- A) Borrower self-certifies
- B) Tax transcripts
- C) Tri-merged credit report
- D) Purchase contract
Correct

Incorrect
Question 13 of 14

13. Question
What is the primary motive behind occupancy fraud?
- A) To obtain higher interest rates
- B) To avoid PMI
- C) To qualify for renovation financing
- D) To obtain favorable owner-occupant loan terms
Correct

Incorrect
Question 14 of 14

14. Question
Why are investment-property mortgages more expensive than owner-occupied mortgages?
- A) Investment properties have higher default risk
- B) Appraisals are costlier
- C) Processing fees are regulated
- D) Investment loans require PMI
Correct

Incorrect

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