Finance
A South Carolina lender 'red flags' a mortgage application for potential fraud when:
AThe borrower has excellent credit
BThere are inconsistencies in income documentation, inflated appraisals, or straw buyer indicators✓ Correct
CThe borrower uses an FHA loan
DThe down payment comes from a gift
Explanation
Mortgage fraud indicators include inconsistent documentation, sudden unexplained income increases, appraisals significantly above market, straw buyers, and undisclosed transactions. Lenders must report suspected fraud to relevant agencies.
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Key Terms to Know
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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
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