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ABA CRCM Practice Test - Questions Answers, Page 6

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Question 51

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Compliance issues related to payday lending are all of the following EXCEPT:

Payday lending may adversely affect a bank's CRA rating. Any illegal or questionable practices will negatively affect a bank's CRA performance. A payday lending program may be inconsistent with helping to meet the community's credit needs
Payday lending may adversely affect a bank's CRA rating. Any illegal or questionable practices will negatively affect a bank's CRA performance. A payday lending program may be inconsistent with helping to meet the community's credit needs
The bank (or its third-party partner) must properly disclose all finance charges and fees to payday lending customers. Advertisements of the program are also subject to Truth-in-Lending requirements
The bank (or its third-party partner) must properly disclose all finance charges and fees to payday lending customers. Advertisements of the program are also subject to Truth-in-Lending requirements
Adverse action disclosures must be provided to applicants of payday loans that are denied if a consumer report (including check tracking services) was used in the credit decision
Adverse action disclosures must be provided to applicants of payday loans that are denied if a consumer report (including check tracking services) was used in the credit decision
The bank may be subject to the FOC's unfair or deceptive practices rules.
The bank may be subject to the FOC's unfair or deceptive practices rules.
Suggested answer: D
asked 16/09/2024
Arkadi Popov
43 questions

Question 52

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Which of the following comes under the heading of nontraditional mortgage product risks?

Reduced documentation adds risk to a mortgage loan.Institutions may rely on reduced documentation in the credit underwriting process.Income and credit verification may not be obtained.Use of reduced documentation should be subject to clear policies that require more documentation when the credit risk rises
Reduced documentation adds risk to a mortgage loan.Institutions may rely on reduced documentation in the credit underwriting process.Income and credit verification may not be obtained.Use of reduced documentation should be subject to clear policies that require more documentation when the credit risk rises
Reduced documentation adds risk to a mortgage loan.Institutions may rely on reduced documentation in the credit underwriting process.Income and credit verification may not be obtained.Use of reduced documentation should be subject to clear policies that require more documentation when the credit risk rises
Reduced documentation adds risk to a mortgage loan.Institutions may rely on reduced documentation in the credit underwriting process.Income and credit verification may not be obtained.Use of reduced documentation should be subject to clear policies that require more documentation when the credit risk rises
Perform due diligence before entering into third-party relationships, including a review of the third party's General competence Business practices and operations Reputation Financial capacity Internal controls Record of compliance with laws
Perform due diligence before entering into third-party relationships, including a review of the third party's General competence Business practices and operations Reputation Financial capacity Internal controls Record of compliance with laws
Amounts credited as recovery on a loan must not exceed all principal, finance charges, and fees previously charged off. Amounts that exceed these must be credited as income
Amounts credited as recovery on a loan must not exceed all principal, finance charges, and fees previously charged off. Amounts that exceed these must be credited as income
Suggested answer: A, B
asked 16/09/2024
Sivagami Narayanan
52 questions

Question 53

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In Guidance on Nontraditional Mortgage Product Risks, if the institution has a concentration in a nontraditional mortgage portfolio, the institution should:

Have well-developed monitoring systems and risk management practices
Have well-developed monitoring systems and risk management practices
Monitor by originator and key borrower and portfolio characteristics
Monitor by originator and key borrower and portfolio characteristics
Not understand the risk of payment shock and negative amortization
Not understand the risk of payment shock and negative amortization
A and B
A and B
Suggested answer: D
asked 16/09/2024
jordi vanderpooten
37 questions

Question 54

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If the institution offers both full and reduced documentation loans and there is a pricing premium attached to the reduced documentation loan, the consumer should:

Be alerted to this fact
Be alerted to this fact
Not be alerted to this fact
Not be alerted to this fact
Provide consumers with a clear statement of the options available
Provide consumers with a clear statement of the options available
Not lead consumers with payment option ARMs to choose a non-amortizing or negatively amortizing payment
Not lead consumers with payment option ARMs to choose a non-amortizing or negatively amortizing payment
Suggested answer: A
asked 16/09/2024
Kees den Dekker
47 questions

Question 55

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Institutions that offer nontraditional mortgage products should make sure they comply with the following, as applicable, EXCEPT:

Truth in Lending Act
Truth in Lending Act
FTC Act (i.e., Unfair and Deceptive Acts and Practices)
FTC Act (i.e., Unfair and Deceptive Acts and Practices)
RESTA
RESTA
State laws prohibiting deceptive trade practices
State laws prohibiting deceptive trade practices
Suggested answer: C
asked 16/09/2024
David Aquino
45 questions

Question 56

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Underwriting standards in Subprime Mortgage Lending include:

The borrower's debt-to-income ratio should include the borrower's total yearly housing-related payments as a percentage of gross monthly income
The borrower's debt-to-income ratio should include the borrower's total yearly housing-related payments as a percentage of gross monthly income
Institutions should have a clear policy governing the use of risk-layering features, such as reduced documentation loans or simultaneous second lien mortgages
Institutions should have a clear policy governing the use of risk-layering features, such as reduced documentation loans or simultaneous second lien mortgages
Stated income and reduced documentation loans to subprime borrowers should be made only if there are clear, documented mitigating factors
Stated income and reduced documentation loans to subprime borrowers should be made only if there are clear, documented mitigating factors
Mitigating factors should be present when risk layering features are combined in order to support the underwriting decision and the borrower's repayment capacity
Mitigating factors should be present when risk layering features are combined in order to support the underwriting decision and the borrower's repayment capacity
Suggested answer: A
asked 16/09/2024
George Morales
54 questions

Question 57

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Below mentioned is the necessary information that should be included in the___________. Risk of payment shock---potential payment increases; how the new payment will be calculated when the introductory rate expires Ramifications of prepayment penalties---how they will be calculated, when they will be imposed Ramifications of balloon payments Ramifications of the lack of escrowing for taxes and insurance---who is responsible for paying taxes and insurance and the fact that their costs may be substantial Cost of reduced documentation loans---whether there is a pricing premium required

Consumer protection principles
Consumer protection principles
Underwriting standards
Underwriting standards
Workout arrangements
Workout arrangements
None of these
None of these
Suggested answer: A
asked 16/09/2024
Andrea DG
41 questions

Question 58

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Supervisory review should also be the part of Subprime Mortgage Lending. It should review:

Regulatory agencies will continue to focus on risk management review and consumer compliance processes
Regulatory agencies will continue to focus on risk management review and consumer compliance processes
Hiring and Training of personnel
Hiring and Training of personnel
Agencies will continue to take action against institutions that violate consumer protection laws or fair lending laws or that engages in unfair or deceptive acts or practices or in unsafe or unsound lending practices
Agencies will continue to take action against institutions that violate consumer protection laws or fair lending laws or that engages in unfair or deceptive acts or practices or in unsafe or unsound lending practices
Applicability of prepayment penalties
Applicability of prepayment penalties
Suggested answer: A, C
asked 16/09/2024
Vladimir Kosintsov
41 questions

Question 59

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The act limited balloon payments in consumer leases and enabled consumers to compare lease terms with credit terms where appropriate. The act was implemented by Regulation M (Consumer Leasing). It requires disclosures to consumers before consummation of the lease agreement. This act is:

Consumer leasing act
Consumer leasing act
Risk disclosure act
Risk disclosure act
ALLL
ALLL
None of these
None of these
Suggested answer: A
asked 16/09/2024
Andrea Chichiarelli
45 questions

Question 60

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Content of segregated disclosures in Consumer Leasing Act include all of the following

EXCEPT:

Amount due at lease signing or delivery, itemized by type and amount, including: efundable security deposit Advance monthly or other periodic payment Capitalized cost reduction An itemization of how the amount due will be paid, by type and amount (only required in a motor vehicle lease), using the model form
Amount due at lease signing or delivery, itemized by type and amount, including: efundable security deposit Advance monthly or other periodic payment Capitalized cost reduction An itemization of how the amount due will be paid, by type and amount (only required in a motor vehicle lease), using the model form
Number, amount, and due date of payments scheduled and the total amount of periodic payments
Number, amount, and due date of payments scheduled and the total amount of periodic payments
In an open-end lease, the descriptive statement ''You will owe an additional amount if the actual value of the vehicle is less than the residual value''
In an open-end lease, the descriptive statement ''You will owe an additional amount if the actual value of the vehicle is less than the residual value''
If there are multiple items of property, the property description may be separate
If there are multiple items of property, the property description may be separate
Suggested answer: D
asked 16/09/2024
Vo Quoc Bao
41 questions
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