Question 1

Debt collectors acquiring location information from a third party:

Accepted Answer

All of the options are required by the Fair Debt Collection Practices Act (FDCPA) when debt collectors acquire location information from third parties. In order to comply with the law, debt collectors must identify themselves and their employer, state that they are only verifying location information, and can only contact the third party again if the information provided was incorrect or incomplete.

Question 2

When helping a loan officer determine whether the bank must give a written adverse action notice to a business loan applicant, what should the compliance officer consider?

Accepted Answer

The compliance officer should consider the gross revenue for the preceding year to determine if a written adverse action notice is required, as regulations often use revenue thresholds to determine notice requirements.

Question 3

Which of the following describes the record retention requirements under Regulation B for a credit application from a business with annual gross revenues in excess of$1,000,000?

Accepted Answer

Regulation B requires that for businesses with annual gross revenues over $1,000,000, records must be retained for 12 months if a written statement of adverse action is requested within 60 days after notifying the applicant of the action taken.

Question 4

___________ governs the collection of checks and other cash and noncash items and the handling of returned checks by Federal Reserve Banks. It also covers the rules governing funds transfers sent through the Fedwire. Its purpose is to provide rules for collecting and returning items and settling balances.

Accepted Answer

Regulation J specifically governs the collection of checks and other cash and noncash items by Federal Reserve Banks as well as the handling of returned checks. It also covers rules for funds transfers sent through the Fedwire and the settlement of balances. Regulations Z and X pertain to consumer lending and foreign exchange transactions, respectively.

Question 5

Which of the following are included in unfair practices during debt practices?

Accepted Answer

The answer of Which of the following are included in...

Question 6

What may a creditor do when furnishing credit information?

Accepted Answer

A creditor must designate accounts to show participation by both spouses if both are liable, as this ensures accurate reporting and accountability for both parties involved in the credit agreement.

Question 7

Any person in one of the following category can be debt collector:

Accepted Answer

According to the Fair Debt Collection Practices Act (FDCPA), anyone who fits any of the categories listed above can be considered a debt collector. This includes businesses whose main purpose is to collect debts, individuals who regularly collect debts owed to others (including outside counsel), and creditors who use a different name to give the impression that a third party is collecting the debt. However, forefathers are not relevant to the definition of a debt collector, so option D is incorrect.

Question 8

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

Accepted Answer

If the applicant relies on jointly owned property to establish creditworthiness, a creditor may require another signature on the credit application. This is because the jointly owned property may be used as collateral for the credit, and the creditor wants to ensure that all parties involved in the ownership of the property are aware of the potential risks and responsibilities. The other choices are incorrect. A creditor may require the signature of another person (such as a co-signer) if the applicant is not creditworthy, but this is not limited to the applicant's spouse. Additionally, a creditor may ask the applicant to withdraw the application if it does not meet credit standards, but this is not directly related to the requirement of another signature.

Question 9

It is a corporation or a non-depository institution that maintains an account with a Reserve Bank

Accepted Answer

A clearing institution is an entity that maintains an account with a Reserve Bank in order to facilitate the clearing and settlement of financial transactions for its members or clients. Examples of clearing institutions include clearinghouses, securities depositories, and payment networks.

Question 10

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

Accepted Answer

The creditor must provide the ECOA statement and also 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. This is a requirement under the ECOA for businesses with gross revenues of $1 million or less. Option B and C are incorrect as adverse action notices and the ECOA statement are both required. Option D is incorrect as only providing the ECOA statement is not sufficient under the ECOA.

Question 11

The Fair Credit Reporting Act (FCRA) became effective in 1971. The purpose of FCRA is to regulate:

Accepted Answer

The FCRA was enacted to regulate the consumer credit reporting and related industries to ensure that consumer information is reported in an accurate, timely, and complete manner. This includes ensuring that consumer credit reports are accurate and that consumers are given access to their credit reports and the ability to dispute any errors. The FCRA also regulates how and when consumer information can be shared with third parties, such as employers and lenders.

Question 12

ABC Bank has an interactive Internet Web site at which it takes consumer credit applications. At the time an applicant completes an application on the Web site and submits it, the applicant also is asked for his or her email address. If the application is denied, ABC sends an adverse action notice to the applicant's email address listed on the application. Using this procedure, what is ABC Bank's responsibility?

Accepted Answer

ABC Bank must obtain the applicant's affirmative consent before sending the adverse action notice via email to ensure compliance with electronic communication regulations.

Question 13

Debt collector may not abuse or harass the consumer by:

Accepted Answer

The answer of Debt collector may not abuse or harass...

Question 14

Bob Richardson has had three loan applicants this morning: • Heather Smith, age 17, who needs a car loan for $9,500 for 3 years • John Bako, age 42, who would like a stock loan for $15,000 for 1 year • Maynard Williams, age 70, recently retired, who needs a $50,000 home improvement loan for 12 years Bob's bank uses a judgmental credit evaluation system. For which of these applications is Bob able to consider the age of the applicant as a factor in the decision making process?

Accepted Answer

The answer of Bob Richardson has had three loan applicants...

Question 15

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?

Accepted Answer

The bank must send an adverse action notice because Ms. Phillips did not take the bank's counteroffer. Under the Equal Credit Opportunity Act, a bank must provide an adverse action notice when it denies or counteroffers a loan to a potential borrower. The notice must include the reason for the adverse action and an explanation of the borrower's right to obtain the reasons for the decision. In this case, the bank offered a counteroffer that was different than what Ms. Phillips requested, which means they must provide an adverse action notice.

Question 16

Validation of debt says:

Accepted Answer

The Fair Debt Collection Practices Act (FDCPA) requires that a consumer must be sent a written debt validation notice within five calendar days of the initial communication unless the information is included in the initial communication or the consumer pays the debt.

Question 17

Hector Martinez is a loan officer in a non-community property state. He receives a verbal request for a small business working capital loan from Leon Rogers for his technology consulting business. The business is a sole proprietorship. Mr. Rogers gives Hector a written business plan for his business, a financial statement for the business for the past two years, and a personal financial statement that includes information on himself and his wife. Can Hector assume that the application is a joint application from Mr. Rogers and his wife?

Accepted Answer

The fact that the personal financial statement includes information on Mr. Rogers' wife does not necessarily mean that the loan application is a joint one. The bank cannot assume that it is without explicit consent from both parties. Additionally, the fact that the business is a sole proprietorship means that the loan application is for individual credit, not joint credit.

Question 18

Unless the debt collector has express permission from the consumer or from a court, the law prohibits communication with a consumer under the following conditions EXCEPT:

Accepted Answer

The law prohibits communication at an unusual time or place, such as before 8:00 a.m. or after 9:00 p.m., local time at the consumer's location; when the debt collector knows that the consumer is represented by an attorney in connection with the debt and the attorney's name and address are known (unless the attorney fails to respond within a reasonable period of time to communication from the debt collector); and if the consumer has notified the collector in writing and asked that the collector ceases all further contact. However, communication at the consumer's place of employment is only prohibited if the debt collector knows or has reason to know that the employer forbids such communication. Therefore, Choice C is not prohibited.

Question 19

Regulation B defines "elderly" as having attained an age of how many years?

Accepted Answer

Regulation B defines "elderly" as having attained the age of 62 years.

Question 20

ACME Bank is a state nonmember bank with all of its offices in one state. However, it also has an Internet Web site where it advertises consumer credit and accepts applications from a five-state regional are A. Two of the states are community property states. The other three are not. What is the best explanation for what ACME bank's management should do to comply with the FDIC ECOA spousal signature guidance?

Accepted Answer

Since ACME Bank operates in multiple states, it must become familiar with the spousal property rights laws of each state and ask for spouse signatures only when appropriate under the law. Simply applying the laws of the state where its offices are located may not comply with the laws of the other states where it accepts applications.

Exam 1: Certified Regulatory Compliance Manager