Case Study
You were just presented the following Case Study in the course. We have provided it again here for reference. For your assignment, please answer the multiple-choice questions that follow the Case Study in the Comments Section below.
Hugh G Pain is a recent college graduate and after going
through a simple interview process, has just gone to work for I-always-close
Mortgage Company. He was desperate to
get a job, any job, and this small office promised him that he’d be making six
figures within six months. As the first
college grad in his family, Hugh was anxious to prove himself and start paying
back those college loans.
He had some concerns about the
disorder in the shop on his first day but he told himself to just ignore it and
focus on learning the business. His
manager told him he would be making loan modification loans for people, and
would be helping them get out of bad situations as a result of the terrible
economy.
After spending 20 minutes with
his manager, Julian, going over the requirements for the job, he went back to
his desk and started answering the phone.
Julian told him he would eventually have to get a license but he wanted
to train him first. That sounded like a
good idea to Hugh.
After several weeks training
with the company, Hugh is approached by a woman named Florence yielding a flyer
for I-always-close Mortgage Company advertising ARM mortgages, showing rates as
low as 3%. Florence explains her
situation and said she is very interested in hearing more about these ARM
Mortgages.
Hugh comes on a little strong
and promises that he can get her a fixed rate of 3% no problem. Florence is stunned considering how much
lower this rate was from her previous quote at a different mortgage
office. A little curious as to why this
office is offering such a low rate she asks Hugh what ARM stands for. Hugh explains to her that ARM stands for
Awesome Rate Mortgage, but tells her she will be receiving a fixed rate.
Florence cannot believe her good
luck and decides to move along with Hugh and the Awesome Rate Mortgage. She asks Hugh how soon they will be able to
close. Hugh tells her that he needs her
to fill out a few forms to get her moving in the right direction. He hands the forms over to her and says as
soon as they are filled out he will get the ball rolling.
When Florence looks down at the
forms she notices that they are mostly blank.
Wanting to make sure that there wasn’t a mistake she tells Hugh the
forms are blank and asks him what they are used for. Hugh 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 Hugh’s
response Florence signs the blank documents and turns them back over to Hugh
who says he will get moving on this and that they will be at the closing table
in no time at all.
1. Is
there any issue with Hugh handling Florence’s loan?
a.
No, Hugh acted in accordance with
WV law and licensing regulations
b.
Yes, Hugh has not working at
I-always-close mortgage company very long, and lacks the necessary experience
c.
Yes, Hugh was unlicensed and should
have never touched Florence’s loan
d.
None of the above
2. What,
if anything, is wrong with Hugh offering Florence an awesome rate mortgage?
a.
He blatantly lied about what ARM
stands for
b.
He lied about what the rate for
the loan would be by saying she would receive a fixed rate on an ARM
c.
Hugh did nothing wrong and acted
in the best interest of the client
d.
Both A and B
3. Was
there any issue with Florence signing the blank forms for Hugh to fill in
later?
a.
No, this is a completely
acceptable practice that happens all the time
b.
Yes, you can only allow blank
spaces for Reverse Mortgage loans
c.
Yes, this is a prohibited act
d.
None of the above
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