Certified Regulatory Compliance Manager v1.0

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Exam contains 466 questions

Which of the following comes under the heading of nontraditional mortgage product risks?

  • A. Reduced documentation adds risk to a mortgage loan. Institutions may rely on reduced documentation in the credit underwriting process. Income and credit verification may not be obtained. Use of reduced documentation should be subject to clear policies that require more documentation when the credit risk rises
  • B. Reduced documentation adds risk to a mortgage loan. Institutions may rely on reduced documentation in the credit underwriting process. Income and credit verification may not be obtained. Use of reduced documentation should be subject to clear policies that require more documentation when the credit risk rises
  • C. Perform due diligence before entering into third-party relationships, including a review of the third party"™s General competence Business practices and operations Reputation Financial capacity Internal controls Record of compliance with laws
  • D. Amounts credited as recovery on a loan must not exceed all principal, finance charges, and fees previously charged off. Amounts that exceed these must be credited as income

Answer : AB

In Guidance on Nontraditional Mortgage Product Risks, if the institution has a concentration in a nontraditional mortgage portfolio, the institution should:

  • A. Have well-developed monitoring systems and risk management practices
  • B. Monitor by originator and key borrower and portfolio characteristics
  • C. Not understand the risk of payment shock and negative amortization
  • D. A and B

Answer : D

If the institution offers both full and reduced documentation loans and there is a pricing premium attached to the reduced documentation loan, the consumer should:

  • A. Be alerted to this fact
  • B. Not be alerted to this fact
  • C. Provide consumers with a clear statement of the options available
  • D. Not lead consumers with payment option ARMs to choose a non-amortizing or negatively amortizing payment

Answer : A

Institutions that offer nontraditional mortgage products should make sure they comply with the following, as applicable, EXCEPT:

  • A. Truth in Lending Act
  • B. FTC Act (i.e., Unfair and Deceptive Acts and Practices)
  • C. RESTA
  • D. State laws prohibiting deceptive trade practices

Answer : C

Underwriting standards in Subprime Mortgage Lending include:

  • A. The borrower"™s debt-to-income ratio should include the borrower"™s total yearly housing-related payments as a percentage of gross monthly income
  • B. Institutions should have a clear policy governing the use of risk-layering features, such as reduced documentation loans or simultaneous second lien mortgages
  • C. Stated income and reduced documentation loans to subprime borrowers should be made only if there are clear, documented mitigating factors
  • D. Mitigating factors should be present when risk layering features are combined in order to support the underwriting decision and the borrower"™s repayment capacity

Answer : A

Below mentioned is the necessary information that should be included in the ___________. Risk of payment shock""potential payment increases; how the new payment will be calculated when the introductory rate expires Ramifications of prepayment penalties""how they will be calculated, when they will be imposed
Ramifications of balloon payments Ramifications of the lack of escrowing for taxes and insurance""who is responsible for paying taxes and insurance and the fact that their costs may be substantial Cost of reduced documentation loans""whether there is a pricing premium required

  • A. Consumer protection principles
  • B. Underwriting standards
  • C. Workout arrangements
  • D. None of these

Answer : A

Supervisory review should also be the part of Subprime Mortgage Lending. It should review:

  • A. Regulatory agencies will continue to focus on risk management review and consumer compliance processes
  • B. Hiring and Training of personnel
  • C. Agencies will continue to take action against institutions that violate consumer protection laws or fair lending laws or that engages in unfair or deceptive acts or practices or in unsafe or unsound lending practices
  • D. Applicability of prepayment penalties

Answer : AC

The act limited balloon payments in consumer leases and enabled consumers to compare lease terms with credit terms where appropriate. The act was implemented by Regulation M (Consumer Leasing). It requires disclosures to consumers before consummation of the lease agreement. This act is:

  • A. Consumer leasing act
  • B. Risk disclosure act
  • C. ALLL
  • D. None of these

Answer : A

Content of segregated disclosures in Consumer Leasing Act include all of the following

  • A. Amount due at lease signing or delivery, itemized by type and amount, including: Refundable security deposit Advance monthly or other periodic payment Capitalized cost reduction An itemization of how the amount due will be paid, by type and amount (only required in a motor vehicle lease), using the model form
  • B. Number, amount, and due date of payments scheduled and the total amount of periodic payments
  • C. In an open-end lease, the descriptive statement "You will owe an additional amount if the actual value of the vehicle is less than the residual value"
  • D. If there are multiple items of property, the property description may be separate

Answer : D

In a motor vehicle lease, a mathematical progression showing how the periodic payment is derived, containing the following information:

  • A. Gross capitalized cost (including the agreed-on value of the vehicle)
  • B. Rent charge (the difference between the total of base payment over the lease term minus the depreciation and any amortized amounts)
  • C. Itemization of other charges that are part of the periodic payment
  • D. All of the above

Answer : D

Which one of the following should be included in an early termination notice in case of the termination from consumer leasing agreement?

  • A. A warning to the consumer that a substantial charge may result from early termination (required only in a motor vehicle lease)
  • B. A statement of the conditions under which the lessee or lessor may terminate the lease prior to the end of the lease term
  • C. The purchase option at the end of the lease term
  • D. The amount of any penalty or other charge for early termination (the penalty must be reasonable)

Answer : ABD

In Consumer Leasing Act Content of non-segregated disclosures may be made separately or as part of another document (such as the lease agreement); however, other information cannot be stated, used, or placed so as to mislead or confuse the consumer. Other disclosures include all of the following EXCEPT:

  • A. A statement of the conditions under which the lessee or lessor may terminate the lease before the end of the lease term, along with the amount (or a description of the method of how the amount is determined) of any penalty or other charge for early termination
  • B. Whether the lessee has the option to purchase the leased property during the lease term and, if applicable, the purchase price (or method for determining it) and when the lessee may exercise it
  • C. The lessee"™s right to an independent appraisal of the property if the lessee"™s liability at the end of the lease is based on the realized value of the leased property, and that the appraisal will be binding on all parties
  • D. A statement of maintenance responsibilities including the counter bank responsible and a description of the responsibility

Answer : D

Under Renegotiations, extensions, and assumptions-12 CFR 213.5; any lease that is renegotiated or extended by longer than six months is considered to be a new lease, subject to new disclosure requirements, except when:

  • A. One or more payments are deferred, whether or not there is a charge for the deferral
  • B. Lease property is substituted with property of substantially equivalent or greater value, if no other lease terms are changed
  • C. In a multiple-item lease, property is added, deleted, or substituted provided the average periodic payment does not change by more than 35 percent
  • D. There is an agreement resulting from a pre-order

Answer : AB

In Advertising-12 CFR 213.7, if a percentage rate is used in an advertisement, it cannot be more prominent than any other disclosure, EXCEPT:

  • A. For the warning regarding the limitation of the rate as a measurement of cost
  • B. For beginning at least 3 days before and ending at least 10 days after the broadcast
  • C. For required disclosures in advertisements
  • D. For an advertisement accessed in electronic form

Answer : A

Under Consumer Leasing Act Enforcement-15 USC 1667d section FIRREA penalties include:

  • A. Penalties up to $8,500 per day for violations of laws and regulations
  • B. Penalties up to $37,500 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 $9,500 per day for violations of laws and regulations

Answer : AB

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Exam contains 466 questions

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