A mortgage loan officer is found to have provided false documentation that resulted in a lower interest rate on a loan approved for one of her friends.The loan was subsequently added to a loan pool, securitized and sold.Which of the following risks applies to the false documentation by the employee?

Question

Quizplus · Accepted Answer

The false documentation provided by the employee falls under the category of operational risk, which refers to the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events. The employee's action constitutes a failure of the internal process of verifying the accuracy of documents provided for loan approval. This risk may result in financial losses due to litigation, reputational damage, or regulatory sanctions.

A Mortgage Loan Officer Is Found to Have Provided False