What may a creditor do if an applicant applies for individual unsecured credit?

A creditor may require another signature if the applicant relies on jointly owned property to establish creditworthiness.

A creditor may never require the signature of another person.

A creditor may ask for the signature of the applicant's spouse if the applicant is not creditworthy.

A creditor may require another signature if the applicant relies on jointly owned property to establish creditworthiness.

A creditor may ask the applicant to withdraw the application if it does not meet the creditor's credit standards.

Cassandra Phillips requested a loan to purchase a boat. She asked for $15,000 at 7.5 percent for seven years. The bank considered her request but decided, considering her income and credit history, the best offer of credit the bank could make was $10,000 at 8.25 percent for five years. Rhonda Mays, the loan officer, wrote a letter, setting forth the terms the bank could offer. The letter was mailed on July 1. Ms. Phillips received the letter and began to look elsewhere for a loan on the terms and conditions she wanted. Does the bank have any additional responsibility to Ms. Phillips?

Yes. The bank must send an adverse action notice because Ms. Phillips did not take the bank's counteroffer.

No. Because the bank made the offer of a loan, there is no further responsibility.

No. Because the customer decided to look elsewhere, there is no further responsibility.

Yes. The bank must follow up with a phone call to determine if Ms. Phillips is still interested.

Yes. The bank must send an adverse action notice because Ms. Phillips did not take the bank's counteroffer.

What may a creditor do in response to an application for credit from a business with gross revenues of $1 million or less?

Give a disclosure of the applicant's right to receive a statement of reasons at the time of the application instead of at the time of the adverse action

Mention adverse action notices only if requested by the applicant

Omit the ECOA statement on all notices NOTES

Provide only the ECOA statement to the applicant

What may a creditor do when furnishing credit information?

Must designate accounts to show participation by both spouses if both are liable

May designate accounts in any manner that is convenient and reasonable

Must designate accounts as specified by the parties

Must designate accounts to show participation by both spouses if both are liable

Must designate accounts to show all parties, including guarantors

ABC Bank has an interactive Internet Web site at which it takes consumer credit applications. At the time an applicant completes an application on the Web site and submits it, the applicant also is asked for his or her email address. If the application is denied, ABC sends an adverse action notice to the applicant's email address listed on the application. Using this procedure, what is ABC Bank's responsibility?

Obtain the applicant's affirmative consent before sending the notice

Post the notice on its Web site also

Send a paper notice by regular mail also

Obtain the applicant's affirmative consent before sending the notice

ACME Bank is a state nonmember bank with all of its offices in one state.However, it also has an Internet Web site where it advertises consumer credit and accepts applications from a five-state regional are A. Two of the states are community property states. The other three are not. What is the best explanation for what ACME bank's management should do to comply with the FDIC ECOA spousal signature guidance?

ACME must become familiar with the laws of each of the five states and ask for spouse signatures only when appropriate under the law.

Because ACME has all of its offices within one state, it only has to be knowledgeable of the legal requirements of that state regarding spousal property rights and can apply those laws to all of its operations.

ACME must become familiar with the laws of each of the five states and ask for spouse signatures only when appropriate under the law.

ACME can choose any of the state laws where it operates to apply to its consumer lending operations.

ACME should make only business-purpose loans to avoid the spousal signature rules.

Hector Martinez is a loan officer in a non-community property state. He receives a verbal request for a small business working capital loan from Leon Rogers for his technology consulting business. The business is a sole proprietorship. Mr. Rogers gives Hector a written business plan for his business, a financial statement for the business for the past two years, and a personal financial statement that includes information on himself and his wife. Can Hector assume that the application is a joint application from Mr. Rogers and his wife?

No. The bank cannot assume the application is a joint one simply on the basis of submission of joint financial information.

Yes. Because the financial statement is signed by both Mr. and Mrs. Rogers and includes joint information, the application can be considered to be from both spouses.

Yes. Because the business is a sole proprietorship, the spouse's financial information is important.

No. The bank cannot assume the application is a joint one simply on the basis of submission of joint financial information.

No. Because the business is a sole proprietorship, the bank should assume the application is for individual credit.

When helping a loan officer determine whether the bank must give a written adverseaction notice to a business loan applicant, what should the compliance officer consider?

Gross revenue for the preceding year

Length of time the applicant has been in business

Type of business entity (that is, corporation, partnership, or sole proprietorship)

Which of the following describes the record retention requirements under Regulation Bfor a credit application from a business with annual gross revenues in excess of$1,000,000?

The bank must retain records for 12 months if a written statement of adverse action isrequested within 60 days after notifying the applicant of the action taken.

The bank must retain records for 30 days; however, if a written statement of action isrequested, the bank must retain the records for 90 days.

After 6 months, the bank must dispose of the applications and records in accordancewith waste disposal rules promulgated by the EPA.

The bank must retain records for 12 months if a written statement of adverse action isrequested within 60 days after notifying the applicant of the action taken.

The bank must retain records for 25 months from the date of application.

The Fair Credit Reporting Act (FCRA) became effective in 1971. The purpose of FCRA is to regulate:

The consumer credit reporting and related industries to ensure that consumer information is reported in an accurate, timely, and complete manner

The consumer credit reporting and related industries to ensure that consumer information is reported in an accurate manner

The consumer credit reporting and related industries to ensure that consumer information is reported in a timely manner

The consumer credit reporting and related industries to ensure that consumer information is reported in an accurate, timely, and complete manner

Any person in one of the following category can be debt collector:

A person operating a business whose principal purpose is to collect debts

A person who regularly collects or attempts to collect debts owed to another (this includes outside counsel who collects debts on behalf of the financial institution)

A creditor who collects its own debts using a name other than its own, giving the impression that a third party is collecting it

A person operating a business whose principal purpose is to collect debts

A person who regularly collects or attempts to collect debts owed to another (this includes outside counsel who collects debts on behalf of the financial institution)

A creditor who collects its own debts using a name other than its own, giving the impression that a third party is collecting it

A creditor who collects its own debts because of his forefathers

Unless the debt collector has express permission from the consumer or from a court, the law prohibits communication with a consumer under the following conditions EXCEPT:

At the consumer's place of employment if the debt collector doesn't know or has no reason to know that the employer forbids such communication

At an unusual time or place, such as before 8:00 a.m. or after 9:00 p.m., local time at the consumer's location

When the debt collector knows that the consumer is represented by an attorney in connection with the debt and the attorney's name and address are known (unless the attorney fails to respond within a reasonable period of time to communication from the debt collector)

At the consumer's place of employment if the debt collector doesn't know or has no reason to know that the employer forbids such communication

If the consumer has notified the collector in writing and asked that the collector ceases all further contact. The debt collector may, in such circumstances, notify the debtor of any special remedies available to it, notify the debtor that collection efforts are being terminated, or notify the borrower that the creditor is invoking a specific remedy.

Debt collector may not abuse or harass the consumer by:

Making telephone calls without meaningful disclosure of the caller's identity

Using or threatening to use violence or to harm the physical person, reputation, or property of any person when collecting a debt

Using obscene, profane, or abusive language when communicating with anyone

Allowing a telephone to ring repeatedly or engaging a person in telephone conversations repeatedly with the intent to abuse or harass

Making telephone calls without meaningful disclosure of the caller's identity

Debt collectors acquiring location information from a third party:

Must identify themselves and, if expressly asked, must identify their employer

Must state that the call is to confirm or correct location information

Once location information is received, may not communicate with the third party again unless the person asks the debt collector to or the debt collector reasonably believes the earlier response was erroneous or incomplete and that person now has correct or complete location information

Which of the following are included in unfair practices during debt practices?

May collect only amount legally owed

Postdated checks a. May not solicit for purpose of instituting criminal action b. May not deposit before date on check c. If a check is postdated longer than 5 days, must notify consumer of deposit at least 3 days and no more than 10 days before depositing

May collect only amount legally owed

Postdated checks a. May not solicit for purpose of instituting criminal action b. May not deposit before date on check c. If a check is postdated longer than 5 days, must notify consumer of deposit at least 3 days and no more than 10 days before depositing

May possibly communicate regarding a debt by postcard

May use any language or symbol other than collector's address on any envelope except debt collector may use business name if it does not indicate it is a debt collection business.

Validation of debt says:

Consumer must be sent debt validation in writing within five calendar days of initial communication unless information is contained in initial communication or unless consumer pays the debt

If consumer disputes a debt in writing within 60 days, all collection activity must stop until the debt is verified

If consumer disputes a debt in writing within 15 days, all collection activity must stop until the debt is verified

If a consumer owes multiple debts and makes any multiple payments, debt collector must apply to debt in accordance with the consumer's direction

An electronic image of an item together with electronic information describing that item in an approved format will be considered a valid instrument. Common forms of instruments are the following EXCEPT:

Checks: Drafts drawn on a bank and payable on demand

Cash items: Checks or other items payable on demand and collectible at par and accepted at the Reserve Bank

Noncash items: Items that a Reserve Bank classifies as requiring special handling

Reserve Banks must issue operating circulars, which, together with Regulation J, govern the details of handling items through the Reserve Bank, including

Handling of government items and foreign instruments

Handling of foreign instruments

Handling of clearing instruments

One of the check collection requirements is sending items to Reserve Banks. In this requirement:

A sender other than a Reserve Bank may send any item to the Reserve Bank with which it maintains an account

The following parties are deemed to have handled items, in this order: * The initial sender * The initial sender's administrative Reserve Bank * The Reserve Bank that receives the item from the initial sender * Any other Reserve Bank that receives the item from a Reserve Bank

Reserve Banks must receive cash items and other items (checks) at par

A sender other than a Reserve Bank may send any item to the Reserve Bank with which it maintains an account

The following parties are deemed to have handled items, in this order: * The initial sender * The initial sender's administrative Reserve Bank * The Reserve Bank that receives the item from the initial sender * Any other Reserve Bank that receives the item from a Reserve Bank

Reserve Banks must receive cash items and other items (checks) at par

A foreign bank that maintains reserves under the International Banking Act of 1978

Any of the following foreign correspondents for which the Federal Reserve maintains an account EXCEPT:

A foreign correspondent or agency

By sending an item to a Reserve Bank, a sender:

Warrants to each Reserve Bank handling the item that it has good title, that it is entitled to enforce the item, that the item has not been materially altered, and that the item bears all endorsements applied by parties that previously handled the item in paper or electronic form

The sender makes all of the warranties set forth in the Uniform Commercial Code (UCC) as if the item were subject to the UCC and makes all of the Regulation CC warranties as if the electronic item were a paper item subject to that regulation

Never authorizes the Reserve Bank to handle the item based on this regulation and the Reserve Bank's circulars

Warranties for electronic items that are substitute checks

Warrants to each Reserve Bank handling the item that it has good title, that it is entitled to enforce the item, that the item has not been materially altered, and that the item bears all endorsements applied by parties that previously handled the item in paper or electronic form

The sender makes all of the warranties set forth in the Uniform Commercial Code (UCC) as if the item were subject to the UCC and makes all of the Regulation CC warranties as if the electronic item were a paper item subject to that regulation

The sender agrees to indemnify each Reserve Bank for:

Any loss or expense resulting from sender's lack of authority

Any action taken by the Reserve Bank within the scope of its authority in the handling of the item

Any warranty made by the Reserve Bank under Regulation J, Regulation CC, or the UCC

Any loss or expense resulting from sender's lack of authority

Any action taken by the Reserve Bank within the scope of its authority in the handling of the item

An electronic item that is not a substitute check is not liable for any amount paid by a Reserve Bank that is attributable to the Reserve Bank's own lack of good faith or failure to exercise ordinary care

Any warranty made by the Reserve Bank under Regulation J, Regulation CC, or the UCC

The sender's liability for warranties and indemnities that a Reserve Bank makes for a substitute check is subject to the following conditions and limitations EXCEPT:

Failure of sender to have authority to make the required warranties and agreements

The sender of an original check is not liable for amounts paid by the Reserve Bank absent the sender's agreement to the contrary

The sender's liability under Regulation CC is not altered by the Regulation J provisions

Failure of sender to have authority to make the required warranties and agreements

A sender of an electronic item that is not a substitute check is not liable for any amount paid by a Reserve Bank that is attributable to the Reserve Bank's own lack of good faith or failure to exercise ordinary care

The Reserve Bank may recover from the sender the attorneys' fees if an action is brought against a Reserve Bank on the basis of:

Failure of sender to have authority to make the required warranties and agreements

Any action by the Reserve Bank within the scope of its authority in handling the item

Any warranty made by the Reserve Bank

A sender and any prior collecting banks grant a security interest to the sender's administrative Reserve Bank in all of their respective assets in the possession of the Reserve Bank to secure any of their obligations to the Reserve Bank. This security interest attaches when any warranty is breached or any obligation to the Reserve Bank is incurred. The Reserve Bank may take any action under applicable law to enforce its security interest; including exercising its right to set off amounts against any funds it holds. This situation holds true when:

Bank makes for a substitute check

Sender identifies liability to Reserve Bank

The Reserve Bank may recover by charging any account on its books maintained by the sender if:

The Reserve Bank makes written demand to sender to assume defense of the proceeding

The sender has not made any other payment arrangement acceptable to the Reserve Bank

The Reserve Bank makes written demand to sender to assume defense of the proceeding

Any action by the Reserve Bank within is the scope of its authority in handling the item

The sender has not made any other payment arrangement acceptable to the Reserve Bank

There is any warranty made by the Reserve Bank

By presentation or transmission of an item a Reserve Bank warrants to a subsequent collecting bank and paying bank that:

The Reserve Bank has good title to the item

The item bears all endorsements applied by parties that have previously handled the item in paper or electronic form

Time to bring action against a Reserve Bank:

Claims against Reserve Banks for failure to act in good faith or exercise ordinary care must be brought within two years

Claims against Reserve Banks for warranties given on electronic items that are not substitute checks must be brought within one year

Claims against Reserve Banks for failure to act in good faith or exercise ordinary care must be brought within two years

Claims against Reserve Banks for warranties given on electronic items that are not substitute checks must be brought within one year

Claims against Reserve Banks for guarantees given on electronic items that are not substitute checks must be brought within one year

Claims against Reserve Banks for failure to act in good faith or exercise ordinary care must be brought within three years

While Presenting items for payment:

A Reserve Bank may send an item to a collecting bank with authority to present it for payment or send it for presentment and payment

A Reserve Bank may present an item for payment at the place requested by the paying bank, at a place requested by the nonbank payor, through a clearinghouse, or under a special collection agreement

A Reserve Bank or a subsequent collecting bank may present an item for payment but doesn't send the item for presentment and payment

A Reserve Bank may send an item to a collecting bank with authority to present it for payment or send it for presentment and payment

A Reserve Bank may present an item for payment at the place requested by the paying bank, at a place requested by the nonbank payor, through a clearinghouse, or under a special collection agreement

Within a Reserve Bank's district, the Reserve Bank may present the item indirectly to the paying bank or a nonbank payor, as applicable

A Reserve Bank may present a noncash item for payment if instructed to do so by the sender and if the:

Item provides that it must be presented for acceptance

Item is payable elsewhere than at the residence or business of the payor

Date of payment of the item depends on presentment for acceptance

Item provides that it must be presented for acceptance

Item is payable elsewhere than at the residence or business of the payor

Item sent directly to the paying bank or the nonbank payor

Date of payment of the item depends on presentment for acceptance

Cash items' payment proceeds must be available to the Reserve Bank by the latest of:

The next clock hour that is after the hour the paying bank receives the item

Such other time as provided in the Reserve Bank's operating circulars

The next clock hour that is after the hour the paying bank receives the item

Such other time as provided in the Reserve Bank's operating circulars

When returning items to a Reserve Bank, the paying and returning banks:

Cannot disclaim the warranties, authorizations, and agreements whether or not the returned check bears an endorsement of the paying bank or returning bank

Authorize the Reserve Bank to handle the item in accordance with Regulation J and the operating circulars

Warrant that the check bears all endorsements applied by all parties that handled the check in paper or electronic form

Cannot disclaim the warranties, authorizations, and agreements whether or not the returned check bears an endorsement of the paying bank or returning bank

Authorize the Reserve Bank to handle the item in accordance with Regulation J and the operating circulars

Warrant that the check bears all endorsements applied by all parties that handled the check in paper or electronic form

will not be liable for the failure of a paying bank, collecting bank, or a nonbank payer to pay for an item

ABA CRCM Practice Test 5 - Free Online Exam Prep & Questions

Question 1 / 40

Robin Martin made an individual application to the bank for a car loan. She has just returned to work on a regular basis because she was a full-time homemaker until recently, when her last child entered school. The loan officer would like to ask her about her husbanD. Under what circumstances can the officer ask Robin about her husband?

The creditor believes the spouse's signature will make the applicant more creditworthy.

The applicant is married.

The applicant resides in a community property state.

The applicant's credit reports indicate that the spouse is a better credit risk.

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