Bad Loans will delve into predatory lending practices and common mortgage fraud schemes. Students will learn to identify and avoid predatory lenders’ and fraud perpetrators’ tactics. The course examines the lines on mortgage forms, good faith estimates, fees, discounts, prepayment penalties, and how these items are used by predatory lenders. This course also features valuable information about dealing with issues such as late charges, tax reserves, property insurance, foreclosures, and note modification. Then students will explore popular mortgage fraud schemes and examples from real cases. Fraud tools such as flipping, straw sellers and buyers, “No Doc” loans, silent second mortgages, and false money will also be discussed.
At the completion of this course the student will be able to:
- Describe how to avoid being burned when borrowing money; Discuss how to avoid tricks, scams, plots, schemes and deceptions; Illustrate how unscrupulous lenders get you to sign on the dotted line
- Explain each line on forms used in mortgage lending; Identify fees & discounts and how they're used by predatory lenders; Describe the Truth-In-Lending Act; Define prepayment penalties, assumptions, and promissory notes used in mortgage lending
- Illustrate how to communicate with a loan officer;
- Demonstrate how to deal with issues such as late charges, tax reserves, property insurance, foreclosures, and note modification; List common predatory lending practices; Indicate the borrowers who are more likely to be the target of predatory lending; Identify the areas where scams are more likely to occur; Recognize popular predatory lending techniques
- Recognize when a property is being illegally flipped; Identify when straw sellers and straw buyers are being used to commit fraud; Interpret the legal use of a quitclaim deed
- Recognize fraud using shell companies as straw buyers; Predict the need for an escrow account when repairs need to be made to a
- property; Recognize when straw buyers are used to obtain "No Doc" loans; Describe how straw buyers use false ID to obtain forgiving second mortgages; Discuss the importance of disclosing a silent second mortgage
- Explain how straws obtain false money; Illustrate how fraud occurs without an attorney at closing; Describe how "flipping a neighborhood" works; Recognize fake comparables
- Evaluate how perpetrators move money out of deals to themselves; Identify when false documents are being used, such as HUD-1, quitclaim, and security deeds; Discuss how bankruptcy is used to avoid foreclosure
Bad Loans - Predatory and Fraud - Alabama Real Estate Commission
- Alabama Real Estate Commission
- Website URL:
- Email Address:
- 1201 Carmichael Way
End of Course Instructions
Congratulations on successfully finishing your course! These credits count toward your Alabama Real Estate Continuing Education requirement, and your school of record will submit your credits to the commission upon receipt of the Course Evaluation Form. You should now print a copy of your certificate of completion to keep for your own records. Thank you!
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