Code of Ethics for Retail Industry

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					                              COURSE DESCRIPTION
                                           Course 280
               Fraud Detection, Ethics and the Mortgage
                               Industry


        Description:
               This course is designed for the student in a residential lending environment
               and needs to understand the importance of business ethics and how ethics
               impact lending and the mortgage industry. Upon course completion, the
               student should understand the concepts of ethics, basic business ethics policies
               (including the purpose and importance of a code of ethics), adopting a code of
               ethics for organizations within the mortgage industry and relating ethical
               issues to predatory lending practices. In addition, the issue of mortgage fraud,
               its impact on the mortgage industry and methods of fraud detection and
               prevention.


        Prerequisite:           Basic Skills
        Study Hours:            8
        Text:                   Fraud Detection, Ethics and the Mortgage Industry


        Student Objectives:

                    Understand the definition of ethics and the difference between moral and
                     ethical decisions.
                    Understand ethical behavior and the recommended process for making
                     ethical decisions
                    Understand the definition of fraud and key elements that perpetrate fraud,
                     including the legal criteria for a charge of fraud.
                    Understand the concepts of mortgage fraud including the categories,
                     participants, factors leading to mortgage fraud and its impact on the
                     mortgage industry
                    Understand the types of identity theft


Fraud Detection and Ethics                                   www.schoolofmortgagelending.com
Syllabus
                                               1
        Quizzes:                 5


                 Syllabus

                 Chapter 1– General Fraud Information
                         In this chapter you will review the definition of fraud, the key elements that
                         are common to perpetrating fraud and the legal criteria for a charge of fraud.
                         This is followed by a discussion of mortgage fraud - the categories,
                         participants and two mortgage fraud case studies. Identity theft is also
                         explained.
                         Two of the key factors leading to mortgage fraud are presented, along with a
                         description of the impact and consequences of fraud on the mortgage
                         industry. The requirements for and importance of quality control and related
                         pre-funding measures are also discussed.


                 Chapter 2 – Internal Fraud
                         This section covers the concept of internal fraud - that which occurs on retail
                         originations. Details on fraud for property are discussed as well as
                         controlling internal fraud and suggested responsibility assignments for credit
                         document review.


                 Chapter 3 – External Fraud
                         This section covers the concept of external fraud - that which occurs on
                         loans originated by outside entities (wholesale vs. retail lending). The
                         additional risks of wholesale lending are explained, along with suggested
                         protective measures that can be taken to prevent fraud in this type of
                         business.
                         Quality control plans and procedures for conducting wholesale business are
                         discussed. Details on fraud for profit are explained, along with three
                         examples of external fraud schemes and suggestions for prevention.


                 Chapter 4 - Fraud Detection and Prevention
                         This chapter presents various suggestions and procedures for recognizing
                         and detecting fraud in the loan origination process. Common fraud findings
                         are discussed and “red flag” checklists are provided. General guidelines for
                         fraud detection and prevention are discussed. Information is included
                         explaining social security numbers, FICA, Federal Employer I.D. Numbers
                         along with tools to help verify the validity of this data. A list of various
                         Online Resources is also provided that can provide valuable data to be used
                         in the detection and prevention process.

Fraud Detection and Ethics                                        www.schoolofmortgagelending.com
Syllabus
                                                 2
                 Chapter 5 – Concepts of Ethics
                         In this section of the course you will review the definition of ethics and the
                         difference between moral vs. ethical decisions. Conflicts of interest are
                         explained along with suggested ways of handling such situations. Key
                         factors that motivate ethical behavior are discussed. Suggested resources,
                         methods and rules for enforcing ethical decision-making are presented. At
                         the end of this chapter is a valuable outline for the decision making process.


                 Chapter 6 – Business Ethics Policies
                         This section covers the various styles of business ethics policies and the
                         elements of a code of ethics. The four key reasons for an organization to
                         develop its own code of ethics are provided, along with a sample for
                         formulating a code of ethics.


                 Chapter 7 – Ethics in the Mortgage Industry
                         This chapter provides samples of Codes of Ethics used in the mortgage
                         industry. It also summarizes the “Best Practices” standards published by one
                         of the most recognized professional associations in the industry. Examples
                         and a brief discussion of common ethical issues seen in the lending process
                         follows. The final section in this chapter discusses predatory lending issues
                         and their relationship to ethics in the mortgagee origination process.


                 Glossary
                         NOTE: Understanding the terminology used in mortgage lending is
                         important to successful learning. Please carefully review the glossary so
                         that you have a clear understanding of terms that may be used in the text.




Fraud Detection and Ethics                                       www.schoolofmortgagelending.com
Syllabus
                                                 3

				
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