ABA-Certified Regulatory Compliance Manager - CRCM Set 3

Question - 15 Maximum mark : - 28

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ABA-Certified Regulatory Compliance Manager - CRCM Set 3

Which of the following is true regarding extensions of credit to executive officers, directors, and principal shareholders?

Must be approved in advance by the board of directors if the aggregate credit is more than the greater of either $25,000 or 5 percent of the bank's capital and
surplus, not exceeding $500,000 ✘ Must be approved in advance by the board of directors if the credit is greater than $50,000 or 5 percent of the bank's capital and surplus ✘ May not exceed $100,000 in the aggregate, regardless of approvals ✘ May not exceed $250,000 in the aggregate, regardless of approvals ✔

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Answer: Option B

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What is the longest time after board approval that a bank can approve a line of credit for an executive officer?

12 months of such approval ✘ 9 months of such approval ✘ 14 months of such approval ✘ 6 months of such approval ✔

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Answer: Option B

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First National Bank would like to adopt a recordkeeping system that complies with the requirements of Regulation O. Which of the following best describes the recordkeeping system required by Regulation O?

A system in which the bank annually surveys all executive officers of First National and its affiliates to determine the insiders' related interests ✘ A system in which the bank asks all borrowers as loans are made whether the borrower is a related interest of an insider ✘ A system that surveys insiders of First National annually and requires each insider to disclose his or her related interests ✘ A system that requires an annual survey of affiliate insiders ✔

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Answer: Option B

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Which of the following does an extension of credit NOT include?

An advance by means of an overdraft or cash item ✘ The making or renewal of any loan or granting of a line of credit ✘ An advance against accrued salary ✘ An acquisition of a note on which an insider is a maker, drawer, or guarantor ✔

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Answer: Option B

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Which of the following transactions is subject to the provisions of Regulation O?

Time deposit account held by a director ✘ Travel advance to an executive officer outstanding for less than 30 days ✘ Extension of credit to a director of an unaffiliated, competing, noncorrespondent bank ✘ Extension of credit to a member of the bank's board of directors ✔

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Answer: Option B

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Robin Martin made an individual application to the bank for a car loan. She has just returned to work on a regular basis because she was a full-time homemaker until recently, when her last child entered school. The loan officer would like to ask her about her husband. Under what circumstances can the officer ask Robin about her husband?

The creditor believes the spouse's signature will make the applicant more creditworthy. ✘ The applicant is married. ✘ The applicant resides in a community property state. ✘ The applicant's credit reports indicate that the spouse is a better credit risk. ✔

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Answer: Option B

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Bob Richardson has had three loan applicants this morning:

All of them ✘ None of them ✘ Only Mr. Williams ✘ Mr. Williams and Ms. Smith ✔

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Answer: Option B

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It provides fallback for IE8.

What may a creditor do if an applicant applies for individual unsecured credit?

A creditor may never require the signature of another person. ✘ A creditor may ask for the signature of the applicant's spouse if the applicant is not creditworthy. ✘ A creditor may require another signature if the applicant relies on jointly owned property to establish creditworthiness. ✘ A creditor may ask the applicant to withdraw the application if it does not meet the creditor's credit standards. ✔

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Answer: Option B

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Cassandra Phillips requested a loan to purchase a boat. She asked for $15,000 at 7.5 percent for seven years. The bank considered her request but decided, considering her income and credit history, the best offer of credit the bank could make was $10,000 at 8.25 percent for five years. Rhonda Mays, the loan officer, wrote a letter, setting forth the terms the bank could offer. The letter was mailed on July 1. Ms. Phillips received the letter and began to look elsewhere for a loan on the terms and conditions she wanted. Does the bank have any additional responsibility to Ms. Phillips?

No. Because the bank made the offer of a loan, there is no further responsibility. ✘ No. Because the customer decided to look elsewhere, there is no further responsibility. ✘ Yes. The bank must follow up with a phone call to determine if Ms. Phillips is still interested. ✘ Yes. The bank must send an adverse action notice because Ms. Phillips did not take the bank's counteroffer. ✔

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Answer: Option B

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It provides fallback for IE8.

10.

What may a creditor do in response to an application for credit from a business with gross revenues of $1 million or less?

Give a disclosure of the applicant's right to receive a statement of reasons at the time of the application instead of at the time of the adverse action ✘ Mention adverse action notices only if requested by the applicant ✘ Omit the ECOA statement on all notices NOTES ✘ Provide only the ECOA statement to the applicant ✔

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Answer: Option B

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It provides fallback for IE8.

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ABA-Certified Regulatory Compliance Manager - CRCM Set 3

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