Ethics · 18% of the SAFE exameasy
Correct answer: A lender repeatedly refinances a borrower's loan with little or no benefit to the borrower, primarily to generate fees
Loan flipping occurs when a lender repeatedly encourages a borrower to refinance their existing mortgage, generating fees and closing costs each time with little or no tangible benefit to the borrower. Over multiple flips, the borrower accumulates more debt and pays significant fees while the lender profits. Selling a mortgage to secondary market investors (B) is a normal, legal practice. Borrower income misrepresentation (C) is mortgage fraud, not loan flipping. Charging above-market rates (D) may be predatory pricing but is not the defining characteristic of loan flipping.
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