North Carolina License LawIntermediateNorth Carolina Exam
A broker in NC who discovers their client is planning to use the real estate transaction to commit mortgage fraud should:
AProceed with the transaction since it's not their responsibility, in general
BWithdraw from the representation and, where required, report the fraudCorrect
CNegotiate a higher commission for the risk
DDisclose the fraud only to the other party's agent
Why Withdraw from the representation and, where required, report the fraud Is Correct
Answer B: Withdraw from the representation and, where required, report the fraud
A broker who discovers mortgage fraud or illegal activity must withdraw from the representation and may have reporting obligations. Participating in fraud violates license law and federal law.
Key North Carolina License Law Terms in This Question
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
RedliningAn illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.
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