Term
| What process allows the Examiner-in-Charge to efficiently plan and conduct work both off-site and on-site? |
|
Definition
| Pre-examination planning (PEP) |
|
|
Term
| Approximately ?? months prior to the scheduled on-site date for the examination the Examiner-in-Charge must contact the institution. |
|
Definition
|
|
Term
| Aside from informing the institution of an upcoming examination, what is the main purpose of contacting the bank? |
|
Definition
| To gather information to ensure that the CIDR is narrowly tailored to request only what is necessary to properly conduct the examination. |
|
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Term
When must the CIDR and request letter be sent to the bank?
a. 60 days prior to examination
b. 30 days prior to examination
c. 45 days prior to examination
d. None of the above |
|
Definition
|
|
Term
| The CIDR is a template that is a comprehensive list of information that is relevant to all banks and examinations. (t/f) |
|
Definition
|
|
Term
The best way for the bank to transmit their requested electronic loan download is:
a. regular mail
b. e-mail the Examiner-in-Charge
c. FDICconnect |
|
Definition
|
|
Term
| What is a Compliance Management System CMS? A CMS is how an institution: |
|
Definition
• Learns about its compliance responsibilities
• Ensures employees understand their responsibilities
• Ensures that requirements are incorporated into the business process
• Reviews operations to ensure responsibilities are carried out and requirements are met
• Takes corrective action and updates materials as necessary |
|
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Term
| What are the three independent elements of a CMS? |
|
Definition
• Board and management oversight
• Compliance program
• Compliance audit |
|
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Term
Who is ultimately responsible for developing and administering a CMS that ensures compliance with federal consumer protection laws?
a. The FDIC
b. The bank’s compliance officer
c. The bank’s president and other senior management
d. The bank’s Board of Directors |
|
Definition
| d. The bank’s Board of Directors |
|
|
Term
Which of the following are components of a compliance program?
a. Policies and procedures
b. Training
c. Monitoring
d. Consumer complaint response
e. All of the above |
|
Definition
|
|
Term
_______ is a proactive approach by the institution to identify procedural or training weaknesses in an effort to preclude regulatory violations.
a. Audit
b. Monitoring |
|
Definition
|
|
Term
Children’s Online Privacy Protection Act (COPPA)
Why was COPPA enacted? |
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Definition
| COPPA was enacted to prohibit unfair and deceptive acts or practices in connection with the collection, use, or disclosure of personal information from children under the age of 13 in an online environment. |
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Term
2. The COPPA requires operators of web sites or online services directed at children to:
a. Provide certain notices
b. Obtain parental consent to collect, use, or disclose information about children
c. To require each child using the web site to have a password
d. All of the above |
|
Definition
a. Provide certain notices
b. Obtain parental consent to collect, use, or disclose information about children |
|
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Term
3. Can a bank operate a website that has a children’s section in which there are games which require the child to disclose more personal information than necessary to play the game?
a. Yes
b. No |
|
Definition
|
|
Term
4. Is parental consent necessary when responding on a one-time basis to a specific request from the child and is not used to recontact the child?
a. Yes
b. No |
|
Definition
|
|
Term
Is a NOW (Negotiable Order of Withdrawal) a transaction account?
a. Yes
b. No |
|
Definition
|
|
Term
Which of the following entities are not eligible to maintain a NOW account?
a. One or more individuals, including sole-proprietorships
b. Corporations
c. A not-for-profit organization operated primarily for religious, philanthropic, charitable, educational, political, or other similar purpose
d. For-profit partnerships, including a husband and wife partnership
e. Public funds
f. Individuals who have incorporated, such as Professional Associations (PA)
g. Trust accounts where the beneficial interest is held by two or more unrelated parties, such as realty trust
h. Funds held in a fiduciary capacity (bank trust department, individual fiduciary, or trustee in bankruptcy), provided that all beneficiaries are natural persons |
|
Definition
b. Corporations
d. For-profit partnerships, including a husband and wife partnership
f. Individuals who have incorporated, such as Professional Associations (PA)
g. Trust accounts where the beneficial interest is held by two or more unrelated parties, such as realty trust |
|
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Term
| What is the maximum number of transfers and withdrawals a savings deposit or MMDA (Money Market Deposit Account) customer can make per calendar month or statement cycle? |
|
Definition
|
|
Term
4. All of the following transfers are included in the maximum number allowed by the regulation, except:
a. Transfers to the financial institution for the purpose of repaying loans and associated expenses (as originator or servicer)
b. Transfers to the financial institution that are made for the purpose of repaying loans that are made by the financial institution to the depositor’s demand deposit account for the purpose of covering overdrafts
c. Transfers to another account of the depositor made by mail, messenger, automated teller machine (ATM), or in person
d. Withdrawals made by mail, messenger, telephone (via check mailed to the depositor), ATM, or in person
e. Preauthorized or automated PC (personal computer) transfer |
|
Definition
|
|
Term
| What procedures should a financial institution establish to ensure that depositors do not routinely make excessive transactions on their MMDA or savings accounts that violate Regulation D? |
|
Definition
• Prevent withdrawals or transfers of funds from the MMDA in excess of the regulatory limits
• Adopt procedures to monitor transfers on an ex post basis and contact customers who exceed established limits on more than an occasional basis |
|
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Term
| List four types of deposit accounts. |
|
Definition
• Time
• Demand
• Savings
• Negotiable order of withdrawal (NOW) |
|
|
Term
Regulation DD applies to both consumer as well as commercial accounts.
a. True
b. False |
|
Definition
|
|
Term
| The annual percentage yield (APY) is the percentage rate reflecting the total amount of ______ paid on an account, based on the interest rate and the frequency of compounding for a 365 day period, calculated in accordance to Appendix A of the regulation. |
|
Definition
|
|
Term
| The average daily balance is determined by adding the full amount of principal in the account for each day of the period and dividing that figure by the number of ______ in the period. |
|
Definition
|
|
Term
| A _______ is a premium, gift, award, or other consideration worth more than $____ (whether in the form of cash, credit or merchandise, or any equivalent) given or offered to a consumer during a year in exchange for opening, maintaining, renewing, or increasing an account balance. The term does not include interest, the waiver or reduction of a fee, or the absorption of expenses. |
|
Definition
|
|
Term
Which of the following is not a consumer (select all that apply)?
a. A natural person who holds an account for another in a professional capacity.
b. A natural person who holds an account primarily for personal, family, or household purposes.
c. A corporation. |
|
Definition
|
|
Term
| The ___________ method applies a daily periodic rate to the full amount of the principal in the account each day. |
|
Definition
|
|
Term
The statement setting forth information about an account (other than a time account or passbook savings account) that is provided to a consumer on a regular basis four or more time a year is called a __________.
a. Monthly statement
b. Deposit statement
c. Periodic statement |
|
Definition
|
|
Term
| General and account disclosures shall reflect the _______ obligation of the account agreement between the consumer and the depository institution. |
|
Definition
|
|
Term
| The APY (and the annual percentage yield earned - APYE) disclosed on a ______ statement is considered accurate if it is not more than ____% above or below the APY (and APYE) determined in accordance with the rules in Appendix A of the regulation. |
|
Definition
|
|
Term
| A financial institution must deliver a change in terms notice to consumers at least ____ calendar days in advance of the effective date of any change in a term that may increase/reduce the APY or that negatively affects the consumer. |
|
Definition
|
|
Term
| An advertisement is considered to be misleading or inaccurate if it describes an account as ___________ (or contain a similar term) if any maintenance fee or activity fee may be imposed on the account. |
|
Definition
|
|
Term
| Signs clearly visible to the public advertising deposit rates must state the “annual percentage yield,” using that term or the term _______. |
|
Definition
|
|
Term
All of the following are prohibited under ECOA – Regulation B, except:
a. Age
b. Sex
c. Handicap
d. National Origin
e. None of the above – all are prohibited bases |
|
Definition
| C. Handicap - applicable to FH not ECOA |
|
|
Term
Which of these is a FALSE statement with respect to notices of adverse action?
a. All denial notices provided denied loan requests must provide a specific reason why that loan was denied
b. Denied requests must be provided an adverse action notice within 30 days of completed application receipt
c. A “counteroffer” may be given orally to a customer by a bank
d. Written denial notices are applicable to business credits under $1 million
e. None of the above – all are true statements |
|
Definition
a. All denial notices provided denied loan requests must provide a specific reason why that loan was denied
(Denial notices must either provide the specific reason for denial OR a disclosure of the applicant’s right to receive a statement of specific reasons within 30 days, if requested by the applicant within 60 days of being notified by the bank. This disclosure must provide name, number, and address of the person/office whereby such information may be obtained). |
|
|
Term
3. Which of these is the most accurate statement regarding incomplete applications – notice to the consumer?
a. A notice of incompleteness must be provided the customer by the bank within 90 days upon application receipt
b. A notice of incompleteness must be provided the customer within 30 days upon application receipt
c. A written notice of incompleteness does not have to be given at all; it may be given orally by the bank
d. A notice of incompleteness must be provided the customer within 60 days upon application receipt
e. All of the above statements are true |
|
Definition
b. A notice of incompleteness must be provided the customer within 30 days upon application receipt
(Answer C is also true, but with a caveat. Section 202.9(b)(3) of the Regulation states that at its option, a creditor may inform the applicant orally of the need for additional information; however, if the application remains incomplete, a written notice must be provided). |
|
|
Term
In reviewing ABC bank’s loan policy, which of these policy statements is a direct violation of Regulation B?
a. With respect to income considerations of applicants, we gross up all forms of consumers’ non-taxable income
b. As a general policy, we require credit life insurance for all credit applicants whose gross incomes are less than $35,000 per year
c. As our operations are located in the state of Arkansas, we require signatures of both spouses, even non-applicants, on promissory notes on all real estate loans as an abundance of caution
d. Generally, qualified applicants over age 62 will receive a .50% discount for consumer auto-loans |
|
Definition
c. As our operations are located in the state of Arkansas, we require signatures of both spouses, even non-applicants, on promissory notes on all real estate loans as an abundance of caution
(As Arkansas is a non-community property state, at no time are signatures by the non-applicant spouse for secured transactions allowable on the promissory note. Such signatures are allowable on instruments necessary to satisfy the debt in the event of default, i.e. lien or deed of trust in the case of RE secured loans; however, such signatures on the promissory note are not allowable). – Section 202.7(d)(4). – please be sure to look up the states that are community property states, found in the Commentary to Regulation B.) |
|
|
Term
In reviewing ABC bank’s loan policy, all of these policy statements are a direct violation of Regulation B, except:
a. As our operations are located in the state of Texas, information regarding an applicants’ marital status will be requested on all loan requests
b. Undesirable Loans portion of the policy: Loans to applicants who reside on Indian reservations; these loans will generally not be made
c. Undesirable Loans portion of the policy: Unsecured loans to Spanish-speaking applicants will generally not be made
d. Applicants receiving Social Security Income payments will receive a .50% increase in their loan interest rate, due to these applicants being on fixed incomes
e. All are direct violations of Regulation B |
|
Definition
a. As our operations are located in the state of Texas, information regarding an applicants’ marital status will be requested on all loan requests
(Although E is almost true, the one caveat to A is Texas is a community property state (please be sure to review information on states designated as “community property states” in the Commentary to Regulation B); Section 202.5(d)(1) states that for all applicants applying for individual unsecured credit, a creditor shall not inquire about the applicant’s marital status unless the applicant resides in a community property state or is relying upon property located in that state as a basis for repayment of the credit requested). |
|
|
Term
6. All of these loan types are applicable to government monitoring information requirements, except:
a. Home refinance loans – secured by principal dwelling
b. Home purchase loans – secured by principal dwelling
c. Home improvement loans, if in a HMDA-reported bank
d. Permanent construction loans (if expressly intended to go permanent upon conclusion of construction phase
e. None of the above – all are applicable |
|
Definition
| e. None of the above – all are applicable |
|
|
Term
Which statement is FALSE regarding record retention requirements?
a. For business loan requests of less than $1 million, all written records of the transaction should be retained for a period of 25 months
b. For consumer loan requests, only a copy of the loan application should be kept for 25 months
c. For business loan requests in excess of $1 million, written records of the transaction should be retained for 90 days
d. The recordkeeping requirements do not apply to information received from a “third party” consumer reporting agency
e. None of the above – all are true
f. All of the above are false |
|
Definition
| f. All of the above are false |
|
|
Term
All of the following are prohibited under ECOA – Regulation B, except:
a. Age
b. Sex
c. Handicap
d. National Origin
e. None of the above – all are prohibited bases |
|
Definition
| C. Handicap - applicable to FH not ECOA |
|
|
Term
Which of these is a FALSE statement with respect to notices of adverse action?
a. All denial notices provided denied loan requests must provide a specific reason why that loan was denied
b. Denied requests must be provided an adverse action notice within 30 days of completed application receipt
c. A “counteroffer” may be given orally to a customer by a bank
d. Written denial notices are applicable to business credits under $1 million
e. None of the above – all are true statements |
|
Definition
a. All denial notices provided denied loan requests must provide a specific reason why that loan was denied
(Denial notices must either provide the specific reason for denial OR a disclosure of the applicant’s right to receive a statement of specific reasons within 30 days, if requested by the applicant within 60 days of being notified by the bank. This disclosure must provide name, number, and address of the person/office whereby such information may be obtained). |
|
|
Term
3. Which of these is the most accurate statement regarding incomplete applications – notice to the consumer?
a. A notice of incompleteness must be provided the customer by the bank within 90 days upon application receipt
b. A notice of incompleteness must be provided the customer within 30 days upon application receipt
c. A written notice of incompleteness does not have to be given at all; it may be given orally by the bank
d. A notice of incompleteness must be provided the customer within 60 days upon application receipt
e. All of the above statements are true |
|
Definition
b. A notice of incompleteness must be provided the customer within 30 days upon application receipt
(Answer C is also true, but with a caveat. Section 202.9(b)(3) of the Regulation states that at its option, a creditor may inform the applicant orally of the need for additional information; however, if the application remains incomplete, a written notice must be provided). |
|
|
Term
In reviewing ABC bank’s loan policy, which of these policy statements is a direct violation of Regulation B?
a. With respect to income considerations of applicants, we gross up all forms of consumers’ non-taxable income
b. As a general policy, we require credit life insurance for all credit applicants whose gross incomes are less than $35,000 per year
c. As our operations are located in the state of Arkansas, we require signatures of both spouses, even non-applicants, on promissory notes on all real estate loans as an abundance of caution
d. Generally, qualified applicants over age 62 will receive a .50% discount for consumer auto-loans |
|
Definition
c. As our operations are located in the state of Arkansas, we require signatures of both spouses, even non-applicants, on promissory notes on all real estate loans as an abundance of caution
(As Arkansas is a non-community property state, at no time are signatures by the non-applicant spouse for secured transactions allowable on the promissory note. Such signatures are allowable on instruments necessary to satisfy the debt in the event of default, i.e. lien or deed of trust in the case of RE secured loans; however, such signatures on the promissory note are not allowable). – Section 202.7(d)(4). – please be sure to look up the states that are community property states, found in the Commentary to Regulation B.) |
|
|
Term
In reviewing ABC bank’s loan policy, all of these policy statements are a direct violation of Regulation B, except:
a. As our operations are located in the state of Texas, information regarding an applicants’ marital status will be requested on all loan requests
b. Undesirable Loans portion of the policy: Loans to applicants who reside on Indian reservations; these loans will generally not be made
c. Undesirable Loans portion of the policy: Unsecured loans to Spanish-speaking applicants will generally not be made
d. Applicants receiving Social Security Income payments will receive a .50% increase in their loan interest rate, due to these applicants being on fixed incomes
e. All are direct violations of Regulation B |
|
Definition
a. As our operations are located in the state of Texas, information regarding an applicants’ marital status will be requested on all loan requests
(Although E is almost true, the one caveat to A is Texas is a community property state (please be sure to review information on states designated as “community property states” in the Commentary to Regulation B); Section 202.5(d)(1) states that for all applicants applying for individual unsecured credit, a creditor shall not inquire about the applicant’s marital status unless the applicant resides in a community property state or is relying upon property located in that state as a basis for repayment of the credit requested). |
|
|
Term
6. All of these loan types are applicable to government monitoring information requirements, except:
a. Home refinance loans – secured by principal dwelling
b. Home purchase loans – secured by principal dwelling
c. Home improvement loans, if in a HMDA-reported bank
d. Permanent construction loans (if expressly intended to go permanent upon conclusion of construction phase
e. None of the above – all are applicable |
|
Definition
| e. None of the above – all are applicable |
|
|
Term
Which statement is FALSE regarding record retention requirements?
a. For business loan requests of less than $1 million, all written records of the transaction should be retained for a period of 25 months
b. For consumer loan requests, only a copy of the loan application should be kept for 25 months
c. For business loan requests in excess of $1 million, written records of the transaction should be retained for 90 days
d. The recordkeeping requirements do not apply to information received from a “third party” consumer reporting agency
e. None of the above – all are true
f. All of the above are false |
|
Definition
| f. All of the above are false |
|
|
Term
All of the following are prohibited under ECOA – Regulation B, except:
a. Age
b. Sex
c. Handicap
d. National Origin
e. None of the above – all are prohibited bases |
|
Definition
| C. Handicap - applicable to FH not ECOA |
|
|
Term
Which of these is a FALSE statement with respect to notices of adverse action?
a. All denial notices provided denied loan requests must provide a specific reason why that loan was denied
b. Denied requests must be provided an adverse action notice within 30 days of completed application receipt
c. A “counteroffer” may be given orally to a customer by a bank
d. Written denial notices are applicable to business credits under $1 million
e. None of the above – all are true statements |
|
Definition
a. All denial notices provided denied loan requests must provide a specific reason why that loan was denied
(Denial notices must either provide the specific reason for denial OR a disclosure of the applicant’s right to receive a statement of specific reasons within 30 days, if requested by the applicant within 60 days of being notified by the bank. This disclosure must provide name, number, and address of the person/office whereby such information may be obtained). |
|
|
Term
3. Which of these is the most accurate statement regarding incomplete applications – notice to the consumer?
a. A notice of incompleteness must be provided the customer by the bank within 90 days upon application receipt
b. A notice of incompleteness must be provided the customer within 30 days upon application receipt
c. A written notice of incompleteness does not have to be given at all; it may be given orally by the bank
d. A notice of incompleteness must be provided the customer within 60 days upon application receipt
e. All of the above statements are true |
|
Definition
b. A notice of incompleteness must be provided the customer within 30 days upon application receipt
(Answer C is also true, but with a caveat. Section 202.9(b)(3) of the Regulation states that at its option, a creditor may inform the applicant orally of the need for additional information; however, if the application remains incomplete, a written notice must be provided). |
|
|
Term
In reviewing ABC bank’s loan policy, which of these policy statements is a direct violation of Regulation B?
a. With respect to income considerations of applicants, we gross up all forms of consumers’ non-taxable income
b. As a general policy, we require credit life insurance for all credit applicants whose gross incomes are less than $35,000 per year
c. As our operations are located in the state of Arkansas, we require signatures of both spouses, even non-applicants, on promissory notes on all real estate loans as an abundance of caution
d. Generally, qualified applicants over age 62 will receive a .50% discount for consumer auto-loans |
|
Definition
c. As our operations are located in the state of Arkansas, we require signatures of both spouses, even non-applicants, on promissory notes on all real estate loans as an abundance of caution
(As Arkansas is a non-community property state, at no time are signatures by the non-applicant spouse for secured transactions allowable on the promissory note. Such signatures are allowable on instruments necessary to satisfy the debt in the event of default, i.e. lien or deed of trust in the case of RE secured loans; however, such signatures on the promissory note are not allowable). – Section 202.7(d)(4). – please be sure to look up the states that are community property states, found in the Commentary to Regulation B.) |
|
|
Term
In reviewing ABC bank’s loan policy, all of these policy statements are a direct violation of Regulation B, except:
a. As our operations are located in the state of Texas, information regarding an applicants’ marital status will be requested on all loan requests
b. Undesirable Loans portion of the policy: Loans to applicants who reside on Indian reservations; these loans will generally not be made
c. Undesirable Loans portion of the policy: Unsecured loans to Spanish-speaking applicants will generally not be made
d. Applicants receiving Social Security Income payments will receive a .50% increase in their loan interest rate, due to these applicants being on fixed incomes
e. All are direct violations of Regulation B |
|
Definition
a. As our operations are located in the state of Texas, information regarding an applicants’ marital status will be requested on all loan requests
(Although E is almost true, the one caveat to A is Texas is a community property state (please be sure to review information on states designated as “community property states” in the Commentary to Regulation B); Section 202.5(d)(1) states that for all applicants applying for individual unsecured credit, a creditor shall not inquire about the applicant’s marital status unless the applicant resides in a community property state or is relying upon property located in that state as a basis for repayment of the credit requested). |
|
|
Term
6. All of these loan types are applicable to government monitoring information requirements, except:
a. Home refinance loans – secured by principal dwelling
b. Home purchase loans – secured by principal dwelling
c. Home improvement loans, if in a HMDA-reported bank
d. Permanent construction loans (if expressly intended to go permanent upon conclusion of construction phase
e. None of the above – all are applicable |
|
Definition
| e. None of the above – all are applicable |
|
|
Term
Which statement is FALSE regarding record retention requirements?
a. For business loan requests of less than $1 million, all written records of the transaction should be retained for a period of 25 months
b. For consumer loan requests, only a copy of the loan application should be kept for 25 months
c. For business loan requests in excess of $1 million, written records of the transaction should be retained for 90 days
d. The recordkeeping requirements do not apply to information received from a “third party” consumer reporting agency
e. None of the above – all are true
f. All of the above are false |
|
Definition
| f. All of the above are false |
|
|
Term
| What is the purpose of compliance examinations? |
|
Definition
• Assess the quality of an FDIC supervised institutions compliance management system for implementing federal consumer protection statutes and regulations
• Review compliance with relevant laws and regulations
• Initiate effective supervisory action when elements of an institution’s compliance management system are deficient or when significant violations of law are found |
|
|
Term
| What is a risk focused approach to compliance examinations? |
|
Definition
| Using information gathered about a financial institution to direct FDIC examiner resources to those operational areas that present the greatest compliance risk |
|
|
Term
| What are the three main areas involved in risk scoping that determine the compliance risk to an institution? |
|
Definition
• Developing a compliance risk profile for an institution using various sources of information about its business focus, organizational structure, operations, and past supervisory performance
• Assessing the quality of an institution’s CMS in light of the risks associated with the level and competency of its business operations and product and service offerings
• Testing selected transactions based on risk such as when an operational area is determined to be high risk and the institutions compliance management efforts appear weak |
|
|
Term
| In assessing an institution’s compliance management system an examiner considers several areas. List at least four of these areas. |
|
Definition
• Knowledge level and attitude of management and personnel
• Management responsiveness to emerging issues and past or self identified compliance deficiencies
• Compliance organizational structure and staff turnover
• Management information systems
• Training
• Policies/monitoring/audit |
|
|
Term
| The Fair Credit Reporting Act was substantially amended in 2003 upon the passage of the __________________. |
|
Definition
| Fair and Accurate Credit Transactions Act (FACT ACT) |
|
|
Term
The Fair Credit Reporting Act requires lenders to have a legally permissible purpose to obtain a consumer report. Which of the following are permissible purposes:
a. In response to a court order or Federal Grand jury subpoena
b. In accordance with written instructions of the consumer
c. In connection with a credit transaction
d. Employment purposes
e. All of the above |
|
Definition
|
|
Term
The Fair Credit Reporting Act prohibits the obtaining and use of medical information by a financial institution for any purpose.
a. True
b. False |
|
Definition
|
|
Term
| The Fair Credit Reporting Act provides that financial institutions that accept debit and credit cards for the transaction of business cannot issue electronic receipts that contain more than the last_______ digits of the card number at the point of sale or transaction. |
|
Definition
|
|
Term
The Fair Credit Reporting Act requires financial institutions that make or arrange mortgage loans using credit scores to provide the score and accompanying information for consumer and business purpose loans.
a. True
b. False |
|
Definition
|
|
Term
| The Fair Credit Reporting Act requires financial institutions to provide consumers with a notice either before negative information is provided to a nationwide consumer reporting agency or within ____ days after reporting negative information. |
|
Definition
|
|
Term
| The Fair Credit Reporting Act requires users of consumer reports to verify a consumer’s identity if a consumer report includes ______ or _______. |
|
Definition
| Fraud or Active Duty Alerts. |
|
|
Term
All of these are a component when selecting a focal point for a fair lending analysis, except:
a. Product
b. Group – target and control
c. Pricing criteria
d. Risk
e. Market
f. All of the above |
|
Definition
|
|
Term
2. An examination is about to begin for a $200 million, large volume HMDA lender with two main offices. Which of these red flags would be considered the HIGHEST level of risk leading to further FL analysis:
a. Review of the bank’s HMDA data for the most recent 12 months shows an “average rate spread” disparity of 100 basis points between black and white borrowers in the first lien home purchase product; total of these loans to black borrowers equals 6; total to white borrowers equals 8.
b. Review of the bank’s loan policy contains the following statement within its “undesirable loans” section: loans to individuals of Spanish descent, without a qualified co-signor.
c. Review of the bank’s HMDA data for the most recent 12 months shows a “denial rate” disparity of 66% to black borrowers for first lien home refinance loans (15 loans, 30 denials) vs. 16% for white borrowers (21 loans, 4 denials) in this same product line.
d. All have an equal amount of risk – must evaluate further within the FL analysis
e. None have risk – low risk analysis. |
|
Definition
b. Review of the bank’s loan policy contains the following statement within its “undesirable loans” section: loans to individuals of Spanish descent, without a qualified co-signor.
(Best answer is B, although both B and C would merit high red flags resulting in further analysis. B is chosen because the bank’s loan policy statement is potentially discriminatory on the basis of national origin (ECOA, section 202.4 of Reg. B) in its implication that individuals of Spanish descent must have a co-signor to receive loan consideration. However, C would follow closely in that the bank has a denial rate of approximately 4-to-1 for black vs. white applicants in the first lien home refinance area. A full-scope alysis would need to be done within this area, once the bank’s underwriting criteria has been established. As for A, although the average rate spread disparity is indicative of a red flag, the Interagency Fair Lending Procedures call for a “minimum universe sample size” of 5 transactions to target group vs. 20 to a control group. As in this case, there are only 6 and 8 loans, respectively, to each group, the universe size is insufficient to mandate further analysis.) |
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3. Which of these actions are LEAST likely to happen to a bank if a Fair Lending examination evidences discriminatory violations on that of a prohibited basis?
a. The bank will be ordered to conduct a file search to find potentially affected victims
b. Such findings will negatively impact the Compliance rating of that institution
c. Such findings will negatively impact the CRA rating of that institution, with inclusion of the violation(s) in the bank’s Public Evaluation
d. The violation(s) will be referred to the Department of Justice
e. None of the above
f. All of the above |
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The most recent revisions to the Interagency Fair Lending Examination Procedures occurred when?
a. September 1998
b. January 2006
c. June 2003
d. August 2004
e. None of the above |
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5. When conducting a Fair lending examination that entails a file analysis, “benchmark” transactions are established. What is a benchmark?
a. Most creditworthy loan in the analysis
b. Highest loan by dollar amount in the sample chosen
c. Least qualified approved loan in the sample chosen
d. All of the above
e. None of the above |
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Definition
e. None of the above
(The “benchmark” transaction(s) is derived within an underwriting analysis, and equates to the best rated denied applicant per the bank’s underwriting guidelines. For example, in ABC Bank, many target group applicants were denied for automobile loans due to excessive debt-to-income obligations, and the bank’s underwriting guidelines establish a maximum debt-to-income ratio of 44 percent; one of the target group denials had a debt-to-income ratio of 44 percent, that ratio being the lowest ratio for the target group denials. For purposes of the analysis, that particular denial would be the “benchmark”.) |
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1. In a credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind the transaction under Reg Z 226.23. Transactions that are exempt from the right of rescission include all the following except:
a. A transaction where the borrowed funds are used to purchase a dwelling that will serve as the applicant’s principal residence and will be secured by a security interest in the dwelling
b. The refinancing of an extension of credit for the construction of a consumer’s principal dwelling by a different creditor
c. A transaction in which a state agency is also a creditor
d. A transaction in which a security interest will be acquired in the purchase of a mobile home that will serve as the applicant’s principal dwelling. |
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Definition
b.The refinancing of an extension of credit for the construction of a consumer’s principal dwelling by a different creditor |
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1. Under Regulation Z, a person has the right to rescind a loan transaction when an ownership interest in a dwelling that serves as their principal residence will be encumbered by the lender. The person has a right to rescind within three business days from the following event:
a. Consummation of the transaction occurred on January 29, 2007
b. Delivery of material disclosures occurred on January 27, 2007
c. Lender approved loan transaction on January 15, 2007
d. Delivery of notice of the right to rescind occurred on January 28, 2007.
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Definition
a.Consummation of the transaction occurred on January 29, 2007 |
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3. How many copies of the notice of right to rescind must be given to each person with an ownership interest in a dwelling that is subject to the lender’s security interest?
a. One
b. Two
c. Three
d. Four |
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4. When a person applies for a Home-Equity Line of Credit with a lender secured by a consumer’s principal dwelling or vacation home, the lender has to provide the following disclosures except:
a. A statement that under certain conditions the home-equity plan may be terminated and payment of the full balance required
b. A statement of the payment terms of the plan including the length of the repayment period and draw period
c. A copy of the home equity brochure published by the Federal Reserve Board or permissible substitute given at the time home equity plan disclosures are provided
d. A recent APR for fixed-rate plans
e. A statement that the lender will acquire a security interest in the consumer’s dwelling and that loss of the dwelling may not occur in the event of default.
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Definition
e.A statement that the lender will acquire a security interest in the consumer’s dwelling and that loss of the dwelling may not occur in the event of default. |
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5. The Right of Rescission under Regulation Z dictates that if the required notice or material disclosures are not delivered, the right to rescind shall expire in three years from which of the following:
a. The date of consummation or April 15, 2007
b. The transfer of all of the consumer’s interest in property or April 21, 2007
c. The sale of the property on April 17, 2007
d. Three years from the date of the loan application or April 10, 2004
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Definition
a.The date of consummation or April 15, 2007 |
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Under Regulation Z, Right of Rescission, a transaction secured by a consumer’s principal dwelling may be rescindable. All of the following transactions are rescindable, except:
a. A transaction secured by a mobile home used as principal dwelling
b. A transaction secured by a house boat used as a principal dwelling
c. A transaction secured by a Recreational trailer used as a principal dwelling
d. A transaction secured by a vacation home that will serve as a principal dwelling
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Definition
d.A transaction secured by a vacation home that will serve as a principal dwelling
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Term
Under Regulation AA, a bank may require the cosigner to:
a. Pay the full amount of the debt if the borrower does not pay
b. Pay late fees or collection costs which increases the
c. Be the Spouse of the borrower
d. Both a and b above |
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It is an unfair and deceptive act or practice for a bank to obligate a cosigner unless the cosigner is informed prior to becoming obligated of the nature of the cosigner’s liability.
a. True
b. False |
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Definition
A. True
It is an unfair and deceptive act or practice for a bank to obligate a cosigner unless the cosigner is informed prior to becoming obligated of the nature of the |
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Under Regulation AA, a Cosigner Notice is required to be:
a. Clear and conspicuous
b. Given in writing
c. Given to the cosigner prior to becoming obligated
d. All of the above |
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It is an unfair act or practice for a bank to levy or collect a delinquency charge on a payment when the only delinquency is due to late fees or delinquency charges assessed on earlier installments (also known as pyramiding of late charges).
a. True
b. False |
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All of the following transactions are covered by Regulation AA (Unfair or Deceptive Acts or Practices), except:
a. A loan to acquire furniture for your home
b. A loan to purchase real estate
c. A loan to purchase an automobile for personal use |
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Definition
| b. A loan to purchase real estate |
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6. Under Regulation AA, a bank must provide a Cosigner Notice to partnerships and corporations.
a. True
b. False |
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A consumer makes his regular monthly payment of $100 late in February and the bank assess a $10 late fee; however, in March the $100 payment is made on time, but the consumer fails to pay the $10 late fee assessed for the February delinquent payment and the bank takes it out of the March payment, and then considers the March payment to be delinquent. Under Regulation AA, can the bank assess a late charge for March?
a. Yes
b. No |
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A consumer makes his regular monthly payment of $100 late in February and the bank assess a $10 late fee; however, in March the $100 payment is made on time, but the consumer fails to pay the $10 late fee assessed for the February delinquent payment and the bank takes it out of the March payment, and then considers the March payment to be delinquent. Under Regulation AA, can the bank assess a late charge for March?
a. Yes
b. No |
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