White Collar Crime The Essentials 2nd Edition Payne Test Bank

Payne, White-Collar Crime: The Essentials 2nd Edition Instructor Resource
Chapter 9
Test Bank
Multiple Choice
1. If David Jackson purchases a home, with no intention of living in the home, and he
then transfers the deed to Susan Jones, without disclosing to her the full cost of the
mortgage and taxes of the property. In this example, David Jackson had engaged in which
of the following types of fraud?
a. Straw buyer fraud
b. Short sale fraud
c. Appraisal fraud
d. Equity fraud
Ans: a
Answer Location: Mortgage Fraud
Cognitive Domain: Analyzing
Difficulty Level: Medium
2. If an offender works with a stray buyer to purchase and then default on a home load so
the property will be forced into a short sale, which the perpetrator then can take
advantage of, they have engaged in which of the following?
a. Appraisal fraud
b. Premeditated short sale fraud
c. Equity fraud
d. Rental fraud
Ans: b
3. If Jason Shepherd, whose home has recently gone into foreclosure, burns down his
home in order to have his insurance company pay off the mortgage debt, he had engaged
in which of the following?
a. Dual settlement statements fraud
b. Foreclosure rescue scam
c. Straw buyer fraud
d. Equity fraud
Ans: c
4. Which of the following types of fraud include pump and pay schemes, building bailout
schemes, and faulty credit enhancements?
a. Equity fraud
b. Foreclosure rescue scam
c. Building initiated fraud
d. Straw buyer fraud
Ans: c
Cognitive Domain: Remembering
Difficulty Level: Easy
5. During the mortgage credit boom, which of the following was a practice by some
professionals that allowed people to get a mortgage by lying about the byers
qualifications?
a. Real estate agent fraud
b. Straw buyer fraud
c. Equity fraud
d. Qualifications fraud
Ans: d

6. Which of the following is not a consequence of mortgage fraud?

a. An increase in the value of properties
b. Abandoned homes become targets of vandals
c. An increase in social disorganization in the community
d. Banks lose money which can lead to their closing
Ans: a
Answer Location: Consequences of Mortgage Fraud
7. Which of the following are warning signs of mortgage fraud?

a. Inflated appraisals
b. Requests to sign blank forms
c. Increased commissions for brokers and appraisers
d. All of the above answers are correct
Ans: d
Answer Location: Patterns Surrounding Mortgage Fraud
8. If a tenant who lives in a slumlord run property organizes tenants and mobilizes them
to post negative reviews of the slumlord run property, they have participated in which of
the following?
a. Grassroots responses
b. Legislative consequences
c. Financial consequences
d. Heath consequences
Ans: a
Answer Location: Slumlords as White-Collar Criminals
Cognitive Domain: Understanding
9. If a slumlord fails to remove lead paint from their building and children eat the lead
pain they are more likely to have neuropsychological deficient and in turn more likely to
engage in crime. This is an example of what type of consequence?
a. Health
b. Crime
c. Social disorganization
d. All of the above
Ans: d
Cognitive Domain: Evaluating
10. Richard, a realtor, continues to sell a property in order to generate fees and
commissions. This is an example of which of the following?
a. Churning
b. Fraudulent loan
c. Liar loan
d. Home improvement scam
Ans: a
True/False
1. Appraisal fraud happens when an appraisers over or underestimates the value of a

home.
Ans: T
2. Flipping homes can create a variety of problems for communities, one of which is
inflated home values which increases the property taxes for existing homeowners.
Ans: T
3. Professional associations such as the Mortgage Bankers Association have

recommended changes such as enhancing intergovernmental collaborations in
prosecution of mortgage fraud cases to reduce mortgage fraud.
Ans: T
4. Most criminologists argue that practices surrounding the fraud in the housing crisis
have little impact on minorities groups.
Ans: F
5. Tenants of slumlord run properties may experience serious emotional consequences as

identified by Maslow’s hierarchy of needs.
Ans: T
Answer Location: Chapter 9: Slumlords as White-Collar Criminals
6. Some judges have been creative in their punishments of Slumlords including having
Slumlords being forced to live in their dilapidated properties to experience the conditions
their tenants have lived in.
Ans: T
7. Due to the creation of physically deteriorated buildings, increased stress on tenants and
dangerous physical conditions slumlord-run buildings can contribute to the crime
problem in a community.
Ans: T
8. While a variety of strategies have been attempted, efforts to control slumlords have
largely been unsuccessful.
Ans: T
9. Grassroots responses to slumlords involved states passing laws that provide protection
and assistance to tenants who live in slumlord run buildings.
Ans: F

10. Dehumanization is a problem for residents of slumlord-run properties, where

residents feel devalued, disrespected, and undervalued.
Ans: T
Short Answer
1. List three types of fraudulent activities that occur under reverse mortgage fraud.
Ans: Answers could include:—i. Charging for free information—ii. Misrepresenting re-
loan counseling—iii. Forgery—iv. Posing as government officials—v. Bundling
unnecessary services
2. Describe two of the three types of builder initiated fraud.

Ans: Answers could include:—i. Pump and pay schemes: fraudulently increasing a
property’s value and collecting money from the equity—ii. Builder bailout schemes:
builders offer incentives to buyers but do not disclose these offers to the lender in an
attempt to make the property appear to be worth more than it actually is—iii. Faulty
credit enhancements: when builders make it appear that the a buyer has more credit than
they do
3. Describe what you consider to be the two most challenging problems related to
slumlords. Provide a strategy for addressing each and outline how you would put it into
practice.
Ans: i. Answers may include health consequences, financial consequences,
dehumanization, emotional consequences, decreased property values, social
disorganization, crime, legislative consequence, and grassroots efforts.—ii. Respondents
can provide an original strategy, incorporating information from the textbook to address
their choices.
Cognitive Domain: Creativity
Difficulty Level: Hard
4. Which type of mortgage fraud has the biggest impact on communities? Which has the
least? Provide a strategy to address each and discuss how you would put them into
practice.
Ans: i. Answers may vary but can include: short sale fraud, straw buyer fraud, equity
skimming, appraisals fraud, reverse mortgage fraud, equity fraud, flipping, builder
initiated fraud, qualifications fraud, real estate, and investor fraud.—ii. Respondents must
create/develop arguments about which type of mortgage fraud has the biggest and least
impact, and how they would deal with each.
Cognitive Domain: Creativity
5. How does flipping houses cause problems in a community? How serious do you
consider the impact of these problems on communities?
Ans: i. Problems for communities include: houses may not be well maintained, and
dilapidated properties may lead to additional problems. When a flipped home is sold at a
high price, it may artificially increase the property values of surrounding properties, but
eventually values drop, leaving property owners with homes worth less than the value of
the mortgage.—ii. These issues may lead to homeowners losing their homes and housing
sitting empty.
Cognitive Domain: Evaluating

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Payne, White-Collar Crime: The Essentials 2nd Edition Instructor Resource

Answer Location: Mortgage Fraud

6. Which of the following is not a consequence of mortgage fraud?

7. Which of the following are warning signs of mortgage fraud?

1. Appraisal fraud happens when an appraisers over or underestimates the value of a

3. Professional associations such as the Mortgage Bankers Association have

5. Tenants of slumlord run properties may experience serious emotional consequences as

Answer Location: Slumlords as White-Collar Criminals

10. Dehumanization is a problem for residents of slumlord-run properties, where

2. Describe two of the three types of builder initiated fraud.

Difficulty Level: Easy

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