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ABA CRCM Practice Test - Questions Answers, Page 5

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Question 41

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Which of the following usually comes under the heading of abusive lending?

Abusive lending usually is defined by a variety of lending practices
Abusive lending usually is defined by a variety of lending practices
It is the excessive and hidden fees in the amount financed
It is the excessive and hidden fees in the amount financed
A fundamental characteristic is aggressive marketing of credit to prospective borrowers who cannot repay it on the terms offered
A fundamental characteristic is aggressive marketing of credit to prospective borrowers who cannot repay it on the terms offered
Typically, such loans are underwritten on the liquidation value of the collateral rather than the creditworthiness of the borrower
Typically, such loans are underwritten on the liquidation value of the collateral rather than the creditworthiness of the borrower
Suggested answer: A, C, D
asked 16/09/2024
amy ashton
49 questions

Question 42

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______________ is frequent refinancing that do not benefit the borrower. This practice can result in borrower injury from the fees imposed and from the fact that it decreases home equity and increases the consumer's debt burden, thus increasing the chance of foreclosure.

Loan flipping
Loan flipping
Loan refinancing
Loan refinancing
Securitization
Securitization
Subprime loans
Subprime loans
Suggested answer: A
asked 16/09/2024
Wissem M'RAD
42 questions

Question 43

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Guidelines for National Banks to Guard against Predatory and Abusive Lending Practices---AL-2003-2 says that refusing to purchase the following types of loans can reduce the possibility of purchasing abusive mortgage loans EXCEPT:

Loans in which the lender has not adequately determined the borrower's ability to repay the debt
Loans in which the lender has not adequately determined the borrower's ability to repay the debt
Loans subject to the Home Ownership and Equity Protection Act (HOEPA)
Loans subject to the Home Ownership and Equity Protection Act (HOEPA)
Loans with points and fees in excess of 5 percent of the loan amount, except in cases where the higher amount was to prevent the loan from being unprofitable
Loans with points and fees in excess of 5 percent of the loan amount, except in cases where the higher amount was to prevent the loan from being unprofitable
Loans in which a prepaid multiple-premium credit insurance policy was included in the amount financed
Loans in which a prepaid multiple-premium credit insurance policy was included in the amount financed
Suggested answer: D
asked 16/09/2024
Mihai Stefanescu
36 questions

Question 44

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Predatory lending practices can adversely affect:

A bank's CRA rating
A bank's CRA rating
Equity shipping
Equity shipping
Loan quality control reviews
Loan quality control reviews
Truth in Lending Act
Truth in Lending Act
Suggested answer: A
asked 16/09/2024
Francisco Jesús Cano Hinarejos
59 questions

Question 45

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The purpose of advisory letter in Avoiding Predatory and Abusive Lending Practices in Brokered and Purchased Loans- AL-2003-3 is to:

Adopt sound credit underwriting policies
Adopt sound credit underwriting policies
Alert national banks to the risks they take if they make loans through brokers or purchase loans that contain or reflect abusive or predatory terms or practices
Alert national banks to the risks they take if they make loans through brokers or purchase loans that contain or reflect abusive or predatory terms or practices
Adopt policies that address the circumstances under which the bank would make loans that have features associated with abusive lending practices
Adopt policies that address the circumstances under which the bank would make loans that have features associated with abusive lending practices
Make loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home
Make loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home
Suggested answer: B
asked 16/09/2024
Robert Thompson
35 questions

Question 46

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Examples of unfair practices mentioned in guidelines against Predatory and Abusive Lending includes loan flipping and loan equity stripping. It is said that:

Loan flipping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden
Loan flipping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden
Equity stripping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home
Equity stripping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home
Loan flipping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home
Loan flipping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home
Equity stripping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden
Equity stripping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden
Suggested answer: A, B
asked 16/09/2024
M S
39 questions

Question 47

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Which of the following are recommended practices In Avoiding Predatory and Abusive Lending Practices in Brokered and Purchased Loans---AL-2003-3?

Have written agreements with third-party brokers that specifically and clearly address the rights and responsibilities of each party. Written agreements should 1. Ensure that no inappropriate compensation exists 2. Provide for indemnification to the bank 3. Enable banks to exit the arrangement through a termination procedure 4. Provide for the bank's and the OCC's ability to access all records of the third party and to audit the third party's operations
Have written agreements with third-party brokers that specifically and clearly address the rights and responsibilities of each party. Written agreements should 1. Ensure that no inappropriate compensation exists 2. Provide for indemnification to the bank 3. Enable banks to exit the arrangement through a termination procedure 4. Provide for the bank's and the OCC's ability to access all records of the third party and to audit the third party's operations
Verify that brokers and originators have established policies to ensure that loans will comply with all applicable laws
Verify that brokers and originators have established policies to ensure that loans will comply with all applicable laws
Establish an effective management information system to monitor the performance of third-party brokers and originators
Establish an effective management information system to monitor the performance of third-party brokers and originators
All of the above
All of the above
Suggested answer: D
asked 16/09/2024
fabio josca
42 questions

Question 48

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Below mentioned list shows the significant risks of _______________.

Borrowers with cash-flow difficulties

Borrowers with no lower-cost credit alternatives

Minimal analysis of borrower's ability to repay the loan

Minimal review of borrower's credit history

Credit is usually unsecured

Payday lending
Payday lending
Loan flipping
Loan flipping
Equity stripping
Equity stripping
None of these
None of these
Suggested answer: A
asked 16/09/2024
Amir Trujillo
41 questions

Question 49

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Banks must maintain an ____________adequate to absorb estimated credit losses from payday loans. Banks should evaluate the collectability of accrued fees and finance charges on payday loans and ensure that this income is appropriately measured.

TILA
TILA
FCRA
FCRA
ALLL
ALLL
A and B both
A and B both
Suggested answer: C
asked 16/09/2024
Gabriel Paschoalatto
50 questions

Question 50

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Safety and soundness concerns in FDIC Payday Lending Guidance clearly mention that there should be adequate capital as Minimum capital requirements are not enough to offset the risks of payday loans. Banks should hold capital against its subprime portfolio in amounts:

That are 1 to 5 times greater than normal
That are 1 to 5 times greater than normal
That are 1 to 3 times greater than normal
That are 1 to 3 times greater than normal
That are 1 to 3 times lower than normal
That are 1 to 3 times lower than normal
That should be between 2-5 in comparison to normal
That should be between 2-5 in comparison to normal
Suggested answer: B
asked 16/09/2024
Alex Bu
60 questions
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