CRCM

CRCM practice questions, page 6 of 19, with answer review and explanations.

Question 26

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

  1. 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
  2. Verify that brokers and originators have established policies to ensure that loans will comply with all applicable laws
  3. Establish an effective management information system to monitor the performance of third-party brokers and originators
  4. All of the above

Question 27

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 -

  1. Payday lending
  2. Loan flipping
  3. Equity stripping
  4. None of these

Question 28

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.

  1. TILA
  2. FCRA
  3. ALLL
  4. A and B both

Question 29

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:

  1. That are 1½ to 5 times greater than normal
  2. That are 1½ to 3 times greater than normal
  3. That are 1½ to 3 times lower than normal
  4. That should be between 2-5 in comparison to normal

Question 30

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

  1. 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
  2. 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
  3. 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
  4. The bank may be subject to the FOC's unfair or deceptive practices rules.