Pennsylvania License Law
A Pennsylvania broker who discovers a licensee in their office has falsified a buyer's financial documents in a loan application must:
APrivately counsel the licensee and monitor future transactions
BReport the activity to PREC and potentially federal authorities since it constitutes mortgage fraud✓ Correct
CRequire the licensee to complete ethics training
DSimply discharge the licensee from the brokerage
Explanation
Falsifying loan application documents is mortgage fraud — a federal crime. A Pennsylvania broker who discovers such activity must take immediate corrective action, which may include terminating the licensee, reporting to PREC, and reporting to federal authorities (FBI, HUD-OIG).
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Key Terms to Know
Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
State-Specific Concepts
License Law
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