CRCM Verified Questions And Answers 2024 Updated
Quizzes
During a recent compliance examination, regulators cited the bank for violations of various marketing
regulations. How should the compliance professional FIRST respond? ANS Review the marketing
materials and applicable regulations to verify the finding.
When a bank is cited for a regulatory violation, the compliance professional must first determine whether the
bank should agree with it. This is done by reviewing the pertinent regulations and affected materials. If the
citation is supported by the regulations, then the compliance manager should discuss it with the marketing
manager. Solutions may include training marketing personnel or establishing new policies for reviews.
During a recent compliance examination, regulatory examiners found that the bank was not conducting flood
hazard area determinations before closing on construction loans. The compliance professional has reviewed the
files and agreed with the examiners' finding. What should be done FIRST? ANS Review the bank's flood
policies and procedures to determine where the compliance failure occurred.
If the compliance professional agrees with the regulators on a finding, the root cause of the error must be
determined by consulting policies and procedures. There is no benefit to conducting a risk assessment because
the issue is known. After determining the cause, then the extent of the problem must be determined. Only after
gathering this pertinent information can the compliance professional write an analysis for management
explaining the situation
Legislation was recently enacted to reform consumer real estate protection laws, and the bank will now have to
change the way it documents, discloses, and advertises real estate loans, an integral product line at your bank.
What should the compliance professional do FIRST to implement the new law within the bank? ANS Form
a task force of the business unit managers whose departments will be affected by the law to collectively form
an action plan.
When implementing new rules, it is beneficial to start with a task force of affected managers that can make
decisions about how to implement the new rule. The other actions would eventually become necessary, but it
would be timelier to write the new policy and then develop training only after the compliance professional has
a clearer idea of needed actions. Talking to the bank president about resources would not be helpful to
implementing new legislation, unless it can be shown as necessary to complying as the business units have
chosen.
The federal banking agencies have proposed an amendment to Regulation Z that would require a new early
disclosure statement for loans secured by the borrower's principal dwelling. After reading the proposed change,
what should the compliance professional do FIRST? ANS Prepare a summary document that outlines the
effects the proposed rule would have on the bank's operations.
This proposed change is important to the bank. The compliance professional should first analyze its effect and
provide that summary to the affected business units, and then establish a task force to study the proposal.
Contacting the vendor may be part of the risk considered by the task force. Training bank staff regarding the
,new rule is not appropriate until the rule is final. Proposed rules sometimes do not become final or may change
with the final ruling.
A bank has a large mortgage department as well as a high HMDA error rate. An expensive software program
could automate the process, but the business unit manager does not want to purchase the software because of
its expense. Though it is not as efficient, the manager prefers to make some improvements to the manual
process, add some more robust monitoring procedures, and opt not to purchase the software. What should the
compliance professional do? ANS Document the fact that the level of risk present with manual systems is
acceptable to the mortgage department business unit.
The job of the compliance officer is to assess the risks and inform management of those risks. The business
unit can decide what level of risk to accept. If the high level of HMDA errors continues, even with the
improved procedures, the problem can be escalated and brought to senior management's attention.
A compliance professional is a member of the task force studying how the bank can reduce customer
complaints about holding deposits. One proposed solution involves purchasing an expensive system that will
reduce the number of holds placed by evaluating the customer's history and relationship with the bank. Which
of the following roles is MOST important for the compliance professional on the task force? ANS
Validating the system to ensure it complies with regulatory restrictions.
The compliance professional's role on a task force is to provide knowledge about compliance risk, such as
whether the system is in compliance with relevant laws and regulations. The training, parameters, and cost-
benefit analysis are more operational in nature.
A bank's president would like to begin offering a new home equity line of credit product within two weeks. In
all cases the borrower's principal dwelling will secure the loan. The president has already launched a planned
advertising campaign for the bank's major service markets. What should the compliance professional do
FIRST? ANS Perform a risk assessment to determine the bank's level of risk in offering this new product.
Before going forward, the compliance professional needs to determine what level and types of risk are
involved. It is possible the new product is similar to an existing product, and the new offering will not increase
the bank's risk. After determining the risk, the compliance professional will know better how to proceed
When developing a training plan for commercial lenders, which of the following regulations is least important
to include? ANS Truth in Lending Act, CFPB Regulation Z
The compliance professional should risk manage the training program. A commercial group needs to know the
rules for fair lending, HMDA, and insider lending. Regulation Z is more relevant for the consumer lending
audience.
Under Regulation M, what is a "consumer lease"?
,12 CFR 1013 ANS A consumer lease for the annually adjusted threshold amount or less for the use of
personal property
Roberta Milton's car lease with First National Bank reached its termination on August 1. Roberta and the bank
agreed to extend the lease on a month-to-month basis without charging her a fee for doing so. What disclosure
responsibilities does the bank have now? ANS None, until after six months of the month-to-month lease
A bank does not know all of the specific information to be disclosed on the lease at the time of the
consummation. What may the bank do after attempting to obtain the information? ANS Estimate the
amounts and note that the information is estimated
When must disclosures on consumer leasing transactions subject to Regulation M be made? ANS Before
the consummation of the lease
First National's consumer leasing department placed an ad in the local paper that pictured a car with the
caption, "Sign a lease with us and pay only $275 per month." What other information must this ad have? ANS
The total amount due at consummation or delivery, the number of payments required, and any required
security deposit
Any of the following triggering terms will require full disclosures in the advertisement: the amount of any
payment, the number of required payments, or a statement that no down payment or other payment is required
at consummation. The information that is required to be disclosed includes the payment information, the total
amount due at consummation, and any required security deposit. The bank must also disclose any extra charges
required at the end of the lease term if the lessee's liability is based on the difference between the residual
value and the realized value of the leased property.
What insurance disclosures are required in the lease disclosure statement? ANS The types and amounts of
coverage provided by the lessor and the cost to the lessee.
If provided by the lessor, the disclosure must include the types, amounts, and cost to the lessee. If not provided
by the lessor, the type and amount must be disclosed.
Records regarding compliance with Regulation M must be kept for how long? ANS Two years after the
disclosures are made
With regard to standards for wear and use of leased property, which of the following statements is true? ANS
A lessor must provide a notice of wear and use standards on motor vehicle leases.
, Milton Edwards leased an automobile from First National Bank. The lease contained a provision whereby
Milton would be liable for the automobile at the end of the lease based on its fair market value. At the end of
the lease, the bank notified Milton that the value of the automobile, based on industry publications, was
$10,500 and required him to pay that amount to obtain ownership of the property. Milton objected and
requested that the car be individually appraised. What must the bank do? ANS Allow Milton to hire an
independent appraiser to appraise the automobile (both parties agree to be bound by the appraisal)
The initial disclosure requires that certain disclosures relating to the termination of a lease be given to the
consumer. Which of these disclosures is NOT required? ANS Whether the lease may be extended at the
option of the lessee
Which of the following actions is NOT an adverse action? ANS Refusal to grant credit on the grounds that
the lender does not offer the type of credit requested.
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 area. 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? ANS ACME
must become familiar with the laws of each of the five states and ask for spouse signatures only when
appropriate under the law.
For what do ECOA and Regulation B extend coverage? ANS All types of credit.
The prohibition against discrimination in the Equal Credit Opportunity Act and Regulation B applies to all
types of credit regardless of the borrower, amount, or purpose. Certain adverse action notification requirements
apply only to credit to consumers for personal, family, and household purposes and to credit extended to
businesses that have $1 million or less in gross revenues.
Which of the following statements regarding applications is correct? ANS Creditors may accept oral
applications.
A creditor may set its own procedures for accepting applications. If the creditor makes a policy that no oral
applications will be accepted and, in actual practice, accepts no oral applications, the creditor is in compliance
with 1002.2(f) of Regulation B.
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? ANS Gross revenue for the
preceding fiscal year
