American Bankers Association American Bankers Association Certifications CRCM Questions & Answers

• Question 11:

  Compliance professionals have a duty to keep senior management and the board apprised of the state of compliance within the bank through which of the following:

  A. Self-monitoring and audit results

  B. Proactive compliance controls

  C. Timely and accurate regulatory reporting

  D. All of the options mentioned above

  Correct Answer: D

• Question 12:

  After a compliance officer develops a base of knowledge of regulations, he or she must begin the art of applying regulations in a risk management environment. Which of the following is NOT out of a few things to be kept in mind when determining what to do FIRST?

  A. Think practically about your role as an advisor. Involve the business units in the decision process rather than making decisions for them

  B. Calculate the institution's consolidated risk profile

  C. Make sure you understand the level of risk the bank will tolerate, so decisions do not exceed this limit

  D. Add value by analyzing regulatory requirements for the business units before you present proposed or final rules or solutions

  Correct Answer: B

• Question 13:

  In the mid-1980s a movement began among the federal supervisory agencies to produce a uniform ARM regulation. In 1988, the Federal Reserve Board added the uniform ARM disclosure requirements to a regulation. Therefore, most of the original OCC ARM consumer protection requirements are now found in this new regulation. Adjustable rate mortgage loans made by national banks may be subject to the OCC's ARM regulation or the requirements of this new regulation, or both.

  This new regulation is:

  A. Regulation Z

  B. Truth in Lending

  C. CFR 34.21, 34.22 and 34.23

  D. FIRREA penalty

  Correct Answer: AB

• Question 14:

  Which one of the following is out of the FIRREA penalties included in the enforcement section of Adjusted Mortgage Regulation (12 CFR 34)?

  A. Penalties up to $7,500 per day for violations of laws and regulations

  B. Penalties up to $47,500 per day if violations or unsafe or unsound practices are engaged in recklessly or are part of a pattern of misconduct that causes more than a minimal loss to the bank or any pecuniary gain to the parties involved

  C. Penalties up to $1,375,000 per day against persons who knowingly commit a violation and knowingly or recklessly cause a substantial loss to the bank or a substantial benefit to the party

  D. Penalties up to $6,500 per day for violations of laws and regulations

  Correct Answer: AC

• Question 15:

  In Requirements section of Adjusted Mortgage Regulation (12 CFR 34), for loans subject to both the OCC ARM regulation and to Regulation Z, 12 CFR 226.19(b)--that is, loans made to an individual, for personal purposes, secured by the borrower's principal dwelling, and having a term longer than one year-- the index to which the interest rate is tied must be:

  A. Specified in loan documents

  B. Readily available to and verifiable by the browser

  C. Multiple values of a chosen measure or a moving average of the chosen measure calculated over a specified period

  D. A and B only

  Correct Answer: D

• 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.

  A. Community Reinvestment Act (CRA) responsibilities

  B. Fraudulent marketing tactics

  C. FTC Act

  D. Predatory Lending

  Correct Answer: A

• 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:

  A. High-pressure sales

  B. Excessive fees and interest rate including fees for unnecessary products

  C. Balloon payments that may never cause foreclosures

  D. Excessive refinancing with fees included in the new loan

  Correct Answer: AB

• Question 18:

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

  A. Be appropriate to the size and complexity of the operation

  B. Address the types of products offers and those not authorized

  C. Require credit file documentation

  D. All of these

  Correct Answer: D

• 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:

  A. Provide examples to national banks of practices that may be abusive

  B. Advise banks on how they should avoid abusive practices

  C. Banks should consider appropriate discount rates, credit loss rates, and prepayment rates when valuing these assets

  D. Show how some abusive lending can involve unfair or deceptive practices and therefore violate the Federal Trade Commission Act

  Correct Answer: C

• Question 20:

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

  A. Abusive lending usually is defined by a variety of lending practices

  B. It is the excessive and hidden fees in the amount financed

  C. A fundamental characteristic is aggressive marketing of credit to prospective borrowers who cannot repay it on the terms offered

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

  Correct Answer: ACD