CRCM

CRCM practice questions, page 4 of 19, with answer review and explanations.

Question 16

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.

  1. Community Reinvestment Act (CRA) responsibilities
  2. Fraudulent marketing tactics
  3. FTC Act
  4. Predatory Lending

Question 17

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:

  1. High-pressure sales
  2. Excessive fees and interest rate including fees for unnecessary products
  3. Balloon payments that may never cause foreclosures
  4. Excessive refinancing with fees included in the new loan

Question 18

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

  1. Be appropriate to the size and complexity of the operation
  2. Address the types of products offers and those not authorized
  3. Require credit file documentation
  4. All of these

Question 19

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

  1. Provide examples to national banks of practices that may be abusive
  2. Advise banks on how they should avoid abusive practices
  3. Banks should consider appropriate discount rates, credit loss rates, and prepayment rates when valuing these assets
  4. Show how some abusive lending can involve unfair or deceptive practices and therefore violate the Federal Trade Commission Act

Question 20

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

  1. Abusive lending usually is defined by a variety of lending practices
  2. It is the excessive and hidden fees in the amount financed
  3. A fundamental characteristic is aggressive marketing of credit to prospective borrowers who cannot repay it on the terms offered
  4. Typically, such loans are underwritten on the liquidation value of the collateral rather than the creditworthiness of the borrower