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ABA CRCM Practice Test - Questions Answers, Page 5

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List of questions

Question 41

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

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 increas

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 purchasin

Question 44

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Predatory lending practices can adversely affect:

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:

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:

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?

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

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 ensu

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

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?

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?

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:

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 41

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

Abusive lending usually is defined by a variety of lending practices

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

Typically, such loans are underwritten on the liquidation value of the collateral rather than the creditworthiness of the borrower

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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 refinancing

Securitization

Subprime loans

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Question 43

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 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 in which a prepaid multiple-premium credit insurance policy was included in the amount financed

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Question 44

Predatory lending practices can adversely affect:

A bank's CRA rating

Equity shipping

Loan quality control reviews

Truth in Lending Act

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Question 45

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

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

Make loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home

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Question 46

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

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

Equity stripping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden

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Question 47

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

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

All of the above

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Question 48

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

Loan flipping

Equity stripping

None of these

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Question 49

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

FCRA

ALLL

A and B both

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Question 50

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 3 times greater than normal

That are 1 to 3 times lower than normal

That should be between 2-5 in comparison to normal

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Total 463 questions

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