Ethics · 18% of the SAFE exammedium
Correct answer: An air loan scheme — loans fabricated for nonexistent properties or borrowers with entirely falsified documentation
An air loan is one of the most elaborate mortgage fraud schemes. The loan is entirely fabricated — the property, the borrower, or both do not actually exist. All supporting documentation (appraisals, title reports, employment and income verification) is falsified to create the appearance of a legitimate transaction. The fraud proceeds go directly to the perpetrators. Property flipping fraud involves real properties bought and resold at artificially inflated prices — the properties here don't exist. Straw buyer fraud uses a real person's identity and credit to conceal the actual buyer — here the identities are entirely synthetic. Occupancy fraud involves a real borrower misrepresenting how they'll use a real property. On the exam, the key indicator of an air loan is nonexistent properties or completely fabricated identities.
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