PA State Law Assignment 1 of 3

Blog Assignment #1

Case Study and Questions

You were just presented the following case study with the course.  We have provided it here just in case you need to review any portion of the case study.  The assignment is to answer the multiple choice questions that follow the case study in the comments section below.

After months of house hunting, Jessica has found the perfect home, but now she needs a loan and needs to know what she qualifies for.  Jessica is a little naïve about mortgage products and decided she needed professional help from a mortgage broker.  Jessica walked into Best Bet Mortgages of PA hoping to find what she was looking for.  Jessica is met by Jeff, one of the LO's of the firm who is eager to help.  Jessica makes it known to Jeff that she has trouble understanding mortgage products, but Jeff ensures her that he will act in her best interest.  Jessica lets Jeff know that she just graduated college and started a new career making $45,000 a year; however Jessica has $5,000 in credit card debt and $30,000 in student loan debt that she will have to begin paying on in 6 months.

Jeff assures her that this won’t be a problem that she makes more than enough to qualify on her own and in fact she is an ideal candidate for a fixed-rate loan of 2%.  Jessica can’t believe what she is hearing and is eager to lock this deal down.  Jeff tells her that he needs her to fill out a few forms to get her moving in the right direction.  When Jessica takes the forms, she notices that they are mostly blank.  Wanting to make sure that there wasn’t a mistake she tells Jeff that the forms are blank and asks him what they are used for.  Jeff tells her not to worry about the blanks as he will fill them in for her later and assures her this is standard procedure.  Satisfied with Jeff’s response the woman signs the forms and hands them back to Jeff.  Jessica leaves the office with a promise from Jeff that she will be hearing from him soon.

When Jessica leaves, Jeff begins to look at the forms.  Knowing that Jessica’s debt could be a potential problem he decides to put down that Jessica earns $55,000 a year.  Furthermore, Jeff decides to leave the student loan debt off the forms as well as he believes it should not count against her current income because doesn’t have to start paying them off for another six months.  Finally, Jeff fills in that Jessica will actually be receiving a 5% Adjustable Rate Mortgage, not the 2% fixed rate that she was promised.

There are a few questions to be asked here….

1.     What state law is Jeff breaking by assuring Jessica that she makes more than enough to qualify for a loan on her own before actually verifying if this is true?

2.       Is it a violation that Jessica was given blank forms to sign?

3.       What state law has been violated by Jeff submitting an application that isn’t completely truthful?

4.       What violation has occurred by Jeff switching the rate and type of loan offered to Jessica?

Students should post directly to the Blog!  If you have any problems posting your assignment to the Blog (due to firewall issues etc.), you may send your answer directly to the instructor via email at oil@mymortgagetrainer.com  

After you complete this assignment, you may continue in the course.  





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