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ABA CRCM Practice Test - Questions Answers, Page 4

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Question 31

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For example on a 0-5 scale: The risk trend shows the direction of risk and probable change to risk over the next 12 months. A trend toward increasing risk means that

Question 32

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Compliance professionals have a duty to keep senior management and the board apprised of the state of compliance within the bank through which of the following:

Question 33

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After a compliance officer develops a base of knowledge of regulations, he or she must begin the art of applying regulations in a risk management environment. Which of the following is NOT out of a

Question 34

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In the mid-1980s a movement began among the federal supervisory agencies to produce a uniform ARM regulation. In 1988, the Federal Reserve Board added the uniform ARM disclosure requirements to a re

Question 35

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Which one of the following is out of the FIRREA penalties included in the enforcement section of Adjusted Mortgage Regulation (12 CFR 34)?

Question 36

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In Requirements section of Adjusted Mortgage Regulation (12 CFR 34), for loans subject to both the OCC ARM regulation and to Regulation Z, 12 CFR 226.19(b)---that is, loans made to an individual, fo

Question 37

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Subprime borrowers are those with weakened credit histories or reduced repayment capacity. Loans to these borrowers historically have had a higher delinquency rate. Many lenders have expanded their

Question 38

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The banking agencies issued two guidances to caution depository institutions about risks involved in funding non-depository lenders that engage in predatory lending. Predatory and abusive practices

Question 39

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Under Interagency Guidance on Subprime Lending (1999) lending policy must:

Question 40

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The purpose of guidelines for National Banks to Guard against Predatory and Abusive Lending Practices- AL-2003-2 includes all of the following EXCEPT:

Related questions

Which of the following customers may be exempted under Phase II of the Bank Secrecy Act?

Martha Whitmire, the BSA Compliance Officer for First National Bank, is responsible for monitoring the bank's daily currency activity and wire transfers, for compliance with information retention and reporting requirements. Ms. Whitmire notices during her review on March 10 that, during the previous two weeks, a transaction occurred on the same account several times during the week. The activity appeared at one branch office as cash deposits in dollar amounts under the reporting thresholds. Ms. Whitmire discusses this activity with the branch manager and determines that this same deposit activity occurred several times during the previous six weeks. She then conducts a more extensive examination of the account's activity for several months and discovers that cash deposits were made at one branch office and purchases of bank cashiers checks were made by withdrawals from the same account at a different branch office. All withdrawals and purchases of cashier's checks were for the identical amount as the cash deposits.Which statement best describes Ms. Whitmire's responsibility?

Fastfood, InC. , a nationwide restaurant chain, opened an account at First National Bank last year. Fastfood is making daily deposits in amounts of $15,000 to $20,000. First National needs to determine if this company is an exempt person. What should the bank do first?

A financial institution may provide a customer with a short form initial notice at the same time as it delivers an opt-notice. The short form notice must:

The compliance program should address plans to verify adherence to applicable regulations through:

Banks must establish and maintain effective risk management and control processes over its DCCs and DSAs, including:

Bob's wife is HIV-positive due to a blood transfusion during an appendectomy 15 years ago. She is not yet sick, but takes medication to prevent the onset of AIDS. Bob occasionally needs to take time off from work to take her for testing at Johns Hopkins in Baltimore. Because of complaints about Bob's exposure to this disease, employees have asked HR to limit his contact with them and with customers. The bank has asked Bob not to eat in the lunchroom with the other employees and has placed Bob in a position where he has limited customer contact. Does this company have any potential ADA liability?

In April Lillian Redmond, the teller supervisor for First National Bank, discovers five counterfeit $20 bills in several teller drawers. In May and in June she discovers two additional counterfeit $20 bills. She has no knowledge of criminal activity on the part of any of the bank's employees or customers. She does not suspect any particular person in this transaction. Which of the following statements is true?

What insurance disclosures are required in the lease disclosure statement?

This is a loan term or an arrangement that modifies a loan term under which a bank agrees to cancel all or part of a customer's loan obligation on the occurrence of a specified event. It may be included as a part of the loan documents, or it may be a separate agreement. What is it?

Question 31

For example on a 0-5 scale:

The risk trend shows the direction of risk and probable change to risk over the next 12 months. A trend toward increasing risk means that

Management may want to take additional action through more controls or increased reviews

Risk may prompt a decrease in controls and improved efficiencies

Controls currently in place are appropriate to succeed in keeping risks within management's established risk-tolerance level

Risk measurements exceed management's tolerance for risk

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Question 32

Compliance professionals have a duty to keep senior management and the board apprised of the state of compliance within the bank through which of the following:

Self-monitoring and audit results

Proactive compliance controls

Timely and accurate regulatory reporting

All of the options mentioned above

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After a compliance officer develops a base of knowledge of regulations, he or she must begin the art of applying regulations in a risk management environment. Which of the following is NOT out of a few things to be kept in mind when determining what to do FIRST?

Think practically about your role as an advisor. Involve the business units in the decision process rather than making decisions for them

Calculate the institution's consolidated risk profile

Make sure you understand the level of risk the bank will tolerate, so decisions do not exceed this limit

Add value by analyzing regulatory requirements for the business units before you present proposed or final rules or solutions

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Question 34

In the mid-1980s a movement began among the federal supervisory agencies to produce a uniform ARM regulation. In 1988, the Federal Reserve Board added the uniform ARM disclosure requirements to a regulation. Therefore, most of the original OCC ARM consumer protection requirements are now found in this new regulation. Adjustable rate mortgage loans made by national banks may be subject to the OCC's ARM regulation or the requirements of this new regulation, or both. This new regulation is:

Regulation Z

Truth in Lending

CFR 34.21, 34.22 and 34.23

FIRREA penalty

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Question 35

Which one of the following is out of the FIRREA penalties included in the enforcement section of Adjusted Mortgage Regulation (12 CFR 34)?

Penalties up to $7,500 per day for violations of laws and regulations

Penalties up to $47,500 per day if violations or unsafe or unsound practices are engaged in recklessly or are part of a pattern of misconduct that causes more than a minimal loss to the bank or any pecuniary gain to the parties involved

Penalties up to $1,375,000 per day against persons who knowingly commit a violation and knowingly or recklessly cause a substantial loss to the bank or a substantial benefit to the party

Penalties up to $6,500 per day for violations of laws and regulations

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Question 36

In Requirements section of Adjusted Mortgage Regulation (12 CFR 34), for loans subject to both the OCC ARM regulation and to Regulation Z, 12 CFR 226.19(b)---that is, loans made to an individual, for personal purposes, secured by the borrower's principal dwelling, and having a term longer than one year--- the index to which the interest rate is tied must be:

Specified in loan documents

Readily available to and verifiable by the browser

Multiple values of a chosen measure or a moving average of the chosen measure calculated over a specified period

A and B only

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Question 37

Subprime borrowers are those with weakened credit histories or reduced repayment capacity. Loans to these borrowers historically have had a higher delinquency rate. Many lenders have expanded their lending programs and added subprime products as a method of meeting their _______________by providing greater credit access to lower-income consumers.

Community Reinvestment Act (CRA) responsibilities

Fraudulent marketing tactics

FTC Act

Predatory Lending

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Question 38

The banking agencies issued two guidances to caution depository institutions about risks involved in funding non-depository lenders that engage in predatory lending. Predatory and abusive practices include:

High-pressure sales

Excessive fees and interest rate including fees for unnecessary products

Balloon payments that may never cause foreclosures

Excessive refinancing with fees included in the new loan

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Question 39

Under Interagency Guidance on Subprime Lending (1999) lending policy must:

Be appropriate to the size and complexity of the operation

Address the types of products offers and those not authorized

Require credit file documentation

All of these

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Question 40

The purpose of guidelines for National Banks to Guard against Predatory and Abusive Lending Practices- AL-2003-2 includes all of the following EXCEPT:

Provide examples to national banks of practices that may be abusive

Advise banks on how they should avoid abusive practices

Banks should consider appropriate discount rates, credit loss rates, and prepayment rates when valuing these assets

Show how some abusive lending can involve unfair or deceptive practices and therefore violate the Federal Trade Commission Act

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