Humber/Ontario Real Estate Course 4 Exam Practice

What is a risk associated with mortgage fraud?

1. Forged documents are rarely accepted in the property registration system.

2. Identity theft is not directly connected.

3. It is inconsequential in the residential market.

4. It involves using fake mortgage documents.

5. Lenders are required to verify all documents thoroughly.

6. Property values are not affected.

The correct answer is: It involves using fake mortgage documents.

Mortgage fraud involving the use of fake mortgage documents poses a significant risk in real estate transactions. This type of fraud can lead to severe consequences such as financial losses for the lender, endangers the security of the property, and can result in legal issues for those involved in the fraud. It is crucial for all parties, including lenders and buyers, to be vigilant and conduct thorough due diligence to avoid being victims of such fraudulent activities. The other options are incorrect for the following reasons: A. Forged documents being rarely accepted would actually be a risk associated with mortgage fraud, making this statement incorrect. B. Identity theft can be closely linked to mortgage fraud, so this statement is incorrect. C. Mortgage fraud can have significant impacts on the residential market, making this statement incorrect. E. While lenders should verify documents thoroughly to prevent fraud, the presence of fake mortgage documents can still be a risk, making this statement incorrect. F. Property values can be affected by mortgage fraud, especially if it leads to a decrease in property market confidence, making this statement incorrect.