CRCM

CRCM practice questions, page 5 of 19, with answer review and explanations.

Question 21

______________ 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.

  1. Loan flipping
  2. Loan refinancing
  3. Securitization
  4. Subprime loans

Question 22

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:

  1. Loans in which the lender has not adequately determined the borrower's ability to repay the debt
  2. Loans subject to the Home Ownership and Equity Protection Act (HOEPA)
  3. 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
  4. Loans in which a prepaid multiple-premium credit insurance policy was included in the amount financed

Question 23

Predatory lending practices can adversely affect:

  1. A bank's CRA rating
  2. Equity shipping
  3. Loan quality control reviews
  4. Truth in Lending Act

Question 24

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

  1. Adopt sound credit underwriting policies
  2. 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
  3. Adopt policies that address the circumstances under which the bank would make loans that have features associated with abusive lending practices
  4. Make loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home

Question 25

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

  1. Loan flipping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden
  2. 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
  3. 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
  4. Equity stripping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden