Question 1

When must a bank make its mortgage loan disclosure statement available?

Accepted Answer

Banks are required to make their mortgage loan disclosure statements available to the public upon request.

Question 2

In a review of a bank's home mortgage loan application register, which of the following must be included in Regulation C reporting?

Accepted Answer

Regulation C requires reporting of home mortgage loans that are originated or purchased and then sold within the same reporting period.

Question 3

Which of the following loans would First National report on its loan application register?

Accepted Answer

A refinancing of a home purchase loan secured by a dwelling is reportable on the loan application register under the Home Mortgage Disclosure Act (HMDA).

Question 4

What information must be on the loan application registers for home loans on property located within the bank's metropolitan area?

Accepted Answer

The loan application register must include the county, census tract, and metropolitan area of the property to comply with the Home Mortgage Disclosure Act (HMDA) requirements for properties within a bank's metropolitan area.

Question 5

ACME Bank has a separate page on its Web site where it describes insurance products, such as life insurance and health and disability insurance. The page invites consumers to call the bank officer in charge of selling these products. The Web site's lending page also describes consumer loans and uses the following phrase: "Have peace of mind-credit life and disability insurance are available on all consumer loans to qualified borrowers." Neither the insurance page nor the lending page mentions insured deposits. What does ACME need to do to make sure its Web site is in compliance?

Accepted Answer

ACME Bank needs to place the advertising disclosures on both the Web site's insurance page and its lending page to ensure compliance with regulations regarding the advertisement of insurance products and insured deposits.

Question 6

Which of the following representations on the HMDA loan application register is a violation of Regulation C?

Accepted Answer

Regulation C requires that gender information must be collected by checking a box indicating male or female, rather than using the letters M or F. Using the letters M or F instead of the required checkboxes is a violation of Regulation C. Choices A and C provide incorrect or incomplete information, but are not direct violations of Regulation C. Choice B may not be helpful for analysis, but it is not a direct violation of Regulation C.

Question 7

A banking agency is conducting a credit needs determination. Which of the following is NOT a criterion used in such a determination?

Accepted Answer

The answer of A banking agency is conducting a credit...

Question 8

For HMDA purposes, the term "dwelling" does NOT include which of the following?

Accepted Answer

Timeshares are not considered dwellings for HMDA purposes as they are not considered a type of real estate.

Question 9

It is the policy of First Safe Bank to offer credit life insurance and accident and disability insurance to all consumer loan customers. What procedures fulfill the disclosure requirements for the bank?

Accepted Answer

The best option would be to give each customer the disclosures orally at the time of application and, if applicable, in writing at loan closing. This ensures that the customer is fully informed about the insurance options before making a decision. A sign on loan officers' desks may not be noticed by all customers and may not provide sufficient information. Providing only a written disclosure at closing may not give the customer enough time to consider the options. Disclosures should be given to all customers, whether or not they purchase the insurance.

Question 10

By what date must financial institutions submit their loan application registers to their federal supervisory agency?

Accepted Answer

Financial institutions must submit their loan application registers by March 1 of the year following the calendar year for which the data were compiled, as per the Home Mortgage Disclosure Act (HMDA) requirements.

Question 11

An individual borrowed $1,000 to remodel her mobile home. She lives in the mobile home that is not anchored to the ground. The loan will be secured by the mobile home, but the borrower does not own the lot on which it is parked. For HMDA purposes, this loan is considered to be which of the following types of loans?

Accepted Answer

This loan is specifically taken to remodel the mobile home, which makes it fall under the category of a home improvement loan. It is not a consumer RV loan because it is not for the purchase of an RV, nor is it a home equity loan or second mortgage because the borrower does not own the lot on which the mobile home is parked.

Question 12

John and Elise Fernandez apply to ABC Bank for a loan to purchase a manufactured home. ABC Bank is a community bank with approximately $100 million in assets, and the home would be located outside of the bank's metropolitan area. Mr. and Mrs. Fernandez complete an in-person application for a mobile home that is denied by the bank due to insufficient income. Which piece of information on the Fernandez application is ABC Bank NOT required to report on its HMDA LAR?

Accepted Answer

The metropolitan area where the home will be located is not a required piece of information to be reported on HMDA LAR. HMDA requires reporting of applicant ethnicity, race, the purpose of the loan application, and other relevant data points.

Question 13

On which of these loans does First National have to report the interest rate spread on its HMDA LAR?

Accepted Answer

According to Home Mortgage Disclosure Act (HMDA), First National has to report the interest rate spread on loans secured by a principal dwelling. Hence, the home improvement loan secured by a principal dwelling falls under this category and the interest rate spread on this loan has to be reported on HMDA LAR.

Question 14

Which of the following banks CANNOT select Montana as its home state for deposit production purposes?

Accepted Answer

The answer of Which of the following banks CANNOT select...

Question 15

How must most banks submit loan application registers to their federal supervisory agencies?

Accepted Answer

Most banks must submit loan application registers to their federal supervisory agencies in machine-readable format, which allows for easier and more efficient processing of the data. This format is also required by regulations such as the Home Mortgage Disclosure Act (HMDA).

Question 16

Under HMDA, what is the threshold for reporting the interest rate spread for first lien mortgage loans?

Accepted Answer

Under HMDA, the threshold for reporting the interest rate spread for first lien mortgage loans is when the spread is over 3 percentage points above the average prime offer rate.

Question 17

Which of the following loans or applications is EXCLUDED from HMDA reporting?

Accepted Answer

HMDA reporting is required only for loans made for the purpose of home purchase, improvement, or refinancing, and excludes loans secured by real estate that are made for other purposes such as commercial or business purposes.

Question 18

ACME Bank would like its tellers to help sell insurance products to new and existing customers. The tellers would refer customers to personal bankers who have insurance licenses from the state. The bank would like to reward tellers by giving them a small percentage of the commission for each policy sold where the sale resulted from a referral. Which of the following statements presents ACME's biggest concern in complying with the Consumer Protection in Sales of Insurance regulation?

Accepted Answer

The biggest concern for ACME in complying with the Consumer Protection in Sales of Insurance regulation is that tellers should not be rewarded only when the referral results in a sale. This is because the regulation requires that any rewards or incentives given to employees for insurance sales must be based on more than just the sale itself, such as the quality of the advice given to the customer. Simply rewarding tellers for referrals that result in a sale can create a conflict of interest and potentially lead to unethical behavior. Therefore, ACME should structure their incentive program in a way that ensures that the tellers are providing high-quality advice and not just referring customers to personal bankers to earn a commission.

Question 19

Which of the following is required to be reported on ABC Bank's HMDA LAR?

Accepted Answer

HMDA requires reporting of preapproval requests for home purchase loans that are denied, but not those that are approved or not accepted by the borrower. Additionally, home equity loans are not reported under HMDA. Therefore, the only application that must be reported in this scenario is Mr. and Mrs. Rawlings' preapproval request that was denied by ABC.

Question 20

Williams National Bank has its home office in New York State; however, it has branches in Nebraska. The federal banking agencies most recent host state loan to- deposit publication lists the loan-to-deposit ratio for Nebraska as 78 percent. For Williams Bank to pass the loan-to-deposit screen of the Reigle-Neal Act, what must its loan-to-deposit ratio be for Nebraska?

Accepted Answer

Under the Reigle-Neal Act, a bank with branches in a host state must not have a loan-to-deposit ratio that exceeds the average ratio for all banks in the state by more than 10 percentage points. Therefore, for Williams Bank to pass the loan-to-deposit screen in Nebraska (with a loan-to-deposit ratio of 78 percent), its ratio must be no more than 88 percent (78 percent + 10 percent). The only answer choice that falls below this threshold is C, at 39 percent loan-to-deposit ratio.

Exam 1: Certified Regulatory Compliance Manager