LCE
Before approving a loan, a lending officer should have a reasonable certainty that the member's income will continue. A) True B) False
A) True
When verifying income for a loan, lending officers should make sure the borrower's income is stable and verifiable A) True B) False
A) True
It is not necessary for the borrower to sing a Verification of Employment form or a Borrower's Certification and Authorization form prior to the Credit Union sending the VOE form to the employer. A) True B) False
B) False
Which of the following types of income should not be considered for loan qualification purposes? A) Cash Donna receives for babysitting B) Alimony that Jenny will no longer receives once she remarries next week C) Tips that James receives that he does not report as income D) All of the above
D) All of the above
6. The Equal Credit Opportunity Act prohibits discrimination based on which of the following factors? Check all that apply a. Race b. Color c. Religion d. National origin e. Gender f. Marital status g. Age h. Participation in a public assistance program i. Good faith exercise of any rights under the Consumer Credit Protection Act
a-i. all
10. Mortgage payments should be processed within ____ business day(s) of receipt a. 1 b. 3 c. 6 d. 7
a. 1
14. On a W-2 form, always use box ____ to determine a member's gross annual income. a. 1 b. 2 c. 5 d. None of the above
a. 1
4. When a borrower is initially approved for a SALO, what percentage of the amount advanced is placed in the borrower's salary advance cash account? a. 5% b. 10% c. 50% d. The percentage is pre-determined by the borrower at the time of application e. The percentage depends on the borrower's length of membership
a. 5%
11. For weekly paystubs, the formula to calculate monthly gross income is to ____. a. Multiply the gross pay amount by 52, then divide by 12 b. Multiply the gross pay amount by 26, then divide by 12 c. Multiply the gross pay amount by 24, then divide by 12 d. Use the actual gross pay amount
a. Multiply the gross pay amount by 52, then divide by 12
18. When two members apply for a joint loan and are denied, ___ of them must receive an Adverse Action Notice a. One b. Both
a. One
25. Hazard and Auto insurance tracking is not required on which of the following loan types? a. Token collateral b. Boats c. Home equity line of credit d. RV's
a. Token collateral
1. All of the Credit Union's open-end signature loans have a variable interest rate and allow the member to obtain advances without a new promissory note. a. True b. False
a. True
10. At least one borrower must be an owner of the subject property on first mortgage loans and home equity lines of credit a. True b. False
a. True
11. A co-borrower is any additional borrower whose income and credit history are used to qualify for a loan a. True b. False
a. True
13. An open-end loan allows the borrower and/or co-borrower to request advances of additional funds, for which both will be responsible in their entirety a. True b. False
a. True
13. Credit Reports for Salary Advance Loans (SALO) should only be pulled during the initial loan request a. True b. False
a. True
14. A good lending officer must have the courage to ask pertinent questions and make informed decisions a. True b. False
a. True
14. Payment reversals are not to be used as a means of emergency funds for members a. True b. False
a. True
15. A Social Security Awards letter can be used to verify income a. True b. False
a. True
15. It is the lending officer's responsibility to maintain contact with members who are experiencing financial difficulty a. True b. False
a. True
17. If you approve a loan outside of the lending guidelines for evaluating affordability, you must always provide an explanation, regardless of the borrower's credit score a. True b. False
a. True
18. A borrower's first mortgage payment can change every year as a result of changes in escrow a. True b. False
a. True
18. Lending staff must not participate in granting a loan that might personally benefit them or their family members a. True b. False
a. True
19. Open-end products are loans that allow members to re-borrow funds against a line of credit a. True b. False
a. True
2. When evaluating a member's loan request, you should review the member's credit report regardless of that member's credit score a. True b. False
a. True
20. A lending officer may waive income documentation requirements if the applicant's credit score is 600 or above and the requested amount falls within his or her approval authority a. True b. False
a. True
20. Loans should not be granted unless there is a reasonable certainty that the member can repay without financial hardship a. True b. False
a. True
20. Most condominiums have blanket insurance policies a. True b. False
a. True
21. A new credit report is required for all non-real estate loans a. True b. False
a. True
21. An Adverse Action Notice is not required if a loan request is received that the creditor is prohibited by law from granting a. True b. False
a. True
23. Payment method has no impact on the interest rate of an open-end signature loan a. True b. False
a. True
25. If a member's loan request is denied by a SECU lending officer, the member can appeal the request to the MLRC a. True b. False
a. True
3. The Board of Directors allows SVPs to approve loans up to the stated maximum for the applicable loan program a. True b. False
a. True
4. All first mortgage loans are housed in the Real Estate system a. True b. False
a. True
4. The maximum indebtedness permitted per member to SECU is $2,000,000 a. True b. False
a. True
4. To comply with the FACT Act, the Credit Union must evaluation address discrepancy notices, fraud alerts and active duty alerts to ensure that we are using accurate information and we have properly identified the borrower. a. True b. False
a. True
5. As part of the underwriting process, lending personnel must consider if a loan is in the best interest of an individual member and the membership as a whole a. True b. False
a. True
6. Real estate secured loans always require income verification a. True b. False
a. True
6. To receive a SALO, the member must have a Salary Advance Cash account a. True b. False
a. True
7. If a discount for early payment is not available, the Credit Union pays property taxes prior to the due date to avoid incurring a penalty and to allow the borrower's escrow account to earn as much dividend income as possible. a. True b. False
a. True
8. A Verification of Employment form can be used as documentation to support inclusion of income if an applicant does not have a paystub available a. True b. False
a. True
8. An escrow analysis projects the payment and disbursement for the next twelve months using actual activity from the previous twelve months as a guide. a. True b. False
a. True
8. It is the responsibility of all lending officers to know their lending limits a. True b. False
a. True
2. What is the grace period for the SECU mortgage payments before late charges are assessed? a. 10 days b. 15 days c. One billing cycle d. 30 days
b. 15 days
12. A closed-end variable rate loan is _____. a. A loan that allows members to re-borrow funds against a line of credit b. A loan with no provision to borrow additional funds under same contract c. A loan that allows a member to re-borrow funds after a certain time period has elapsed d. None of the above
b. A loan with no provision to borrow additional funds under same contract
5. A line of credit that provides for subsequent advances without the need for a new promissory note is _______. a. A closed-end loan b. An open-end loan c. Not available at the Credit Union d. None of the above
b. An open-end loan
12. A(n) ____ requires lender to suspend a borrower's right to receive advances from their home equity line of credit. a. Adverse action b. Credit suspension directive c. Billing schedule change d. None of the above
b. Credit suspension directive
1. Members' loan rates are determined by their individual financial status. a. True b. False
b. False
11. When a home equity line of credit is paid in full, you should automatically cancel the deed of trust. a. True b. False
b. False
12. Co-borrowers may benefit from loan proceeds; however, they do not have an obligation to repay the loan a. True b. False
b. False
14. Debt-to-income (D/I) ratio is a Board Policy that states loans over 43% D/I cannot be originated a. True b. False
b. False
15. Force-placed/blanket coverage protects the borrower's equity and personal property a. True b. False
b. False
15. It is acceptable to send marginal loan requests to the Member Loan Review Committee (MLRC) because you are not sure whether you should approve the loan a. True b. False
b. False
16. A lending officer with Tier 2 lending limits can approve a payment reversal a. True b. False
b. False
16. As long as you do not approve the member's loan, it would be appropriate to recommend a member to an auto dealer, and for the referral, receive a "finder's fee" from the dealership a. True b. False
b. False
16. For All loans, our lending guidelines typically require lending officers to document why they believe the loan is affordable if the total debt-to-income ratio exceeds 30% a. True b. False
b. False
17. You discover that your co-worker Bully has prepared and approved his own loan. You are not obligated to report this action to management a. True b. False
b. False
2. A new credit report is always required when a member requests an advance from their open-end line of credit. a. True b. False
b. False
22. When two or more applicants apply for a loan, notification of an adverse action can only be given to the primary applicant a. True b. False
b. False
24. If a member's change in employment results in a payroll frequency change from bi-weekly to monthly, the member's existing bi-weekly mortgage loan frequency can be changed to monthly in the Real Estate (RE) system a. True b. False
b. False
24. The member's credit score may be used as the only justification for approving or denying a loan request a. True b. False
b. False
7. Lending officers have the ability to approve loans outside of their lending authority if thbey document their reasons for doing so in the loan file a. True b. False
b. False
9. The Board of Directors mandates lending guidelines; however, policies may be overridden a. True b. False
b. False
5. Which is not a component of escrow? a. Homeowners insurance b. Personal Property Condo Policy (HO6) c. Property tax d. All of the above
b. Personal Property Condo Policy (HO6)
3. If a borrower wishes to make an extra payment on their mortgage loan in order to decrease the total interest they are charged throughout the life of the loan, what option should the lending officer suggest? a. Pre-payment of a regular payment b. Principal-only payment c. Refinance d. Any of the above
b. Principal-only payment
16. Which of the following is considered an adverse action? a. The interest rate on a member's 5-year ARM increases on the adjustment date b. The Credit Union denies a member's loan request c. A member's Visa credit card is denied by a merchant because the account is over the limit d. The Credit Union increases mortgage loan origination fees
b. The Credit Union denies a member's loan request
18. When tax returns are required to verify income, the borrower must provide the Credit Union with which of the following? a. The first two pages (Form 1040) of the past year's return b. The most recent two years' tax returns with all pages and supporting schedules c. Two years' tax returns from within the last 5 years d. Any of the above
b. The most recent two years' tax returns with all pages and supporting schedules
By sending the Verification of Employment form directly to the employer, and the employer returning the form directly back to the Credit Union, you are ensuring it is __________. a. Inconsistent b. Valid c. Compromised d. All of the above
b. Valid
22. On signature loans, an individual member may borrow no more than a maximum of _____. a. $20,000 b. $35,000 c. $50,000 d. There are no limits
c. $50,000
5. New and used vehicle loans cannot exceed ____ of NADA or MSRP values. a. 80% b. 100% c. 110% d. 125%
c. 110%
6. What should a lending officer do if a member requests a loan amount that is not within the lending officer's lending authority limits? a. Deny the member since the lending officer does not have the authority to approve the request b. Approve the loan and have another lending officer with appropriate lending limits sign off on the loan at a later time c. Have another loan officer with appropriate lending authority review the application and decision the loan request d. Any of the above
c. Have another loan officer with appropriate lending authority review the application and decision the loan request
11. It is appropriate to use knowledge of a member's financial information to solicit business in which of the following situations? a. It is always acceptable to use a member's financial information to solicit business b. It is only acceptable to use a member's financial information to solicit business if the member is aware of it c. It is never acceptable to use a member's financial information to solicit business d. It is only acceptable to use a member's financial information to solicit business if the member is unaware of it
c. It is never acceptable to use a member's financial information to solicit business
8. How are SECU loans funded? a. Member fees b. Loans from other financial institutions c. Member deposits d. All of the above
c. Member deposits
20. If the member rejects a counteroffer, how should you handle the application? a. You should provide additional counteroffers until the borrower is satisfied b. You should withdraw the application until the borrower is prepared to accept the terms c. You should deny the application based on the terms of the original loans request d. You should approve the application based on the terms of the original loan request
c. You should deny the application based on the terms of the original loans request
23. The maximum allowable indebtedness to SECU per member is _____. a. $250,000 b. $500,000 c. $1,500,000 d. $2,000,000
d. $2,000,000
1. Principal-only payments exceeding ____ over the required payment must be keyed as a separate transaction. a. $150 b. $250 c. $300 d. $500
d. $500
17. When are payment reversals appropriate? a. When duplicate payments are made in error b. When payment is applied to the wrong loan c. When the member is short of funds and needs to pay other bills d. A and B only
d. A and B only
1. Which of the following is a benefit of securing a loan with collateral? a. Strengthen the member's willingness to repay the loan b. Member can borrow at a lower interest rate c. SECU may assume less risk when collateral has been secured d. All of the above
d. All of the above
10. The lending staff must do which of the following? a. Avoid situations where one's position might be used to secure special privileges b. Watch out for any kind of improper conduct and report such conduct to management c. Uphold and help apply the laws, bylaws and policies as they relate to the Credit Union d. All of the above
d. All of the above
12. Which of the following should also be considered when calculating a member's gross income? a. Year-to-date totals b. Teacher supplements and skip months c. Bonuses and commission draws d. All of the above
d. All of the above
13. Closed-end fixed rate loans are available for which of the following products? a. New vehicles b. Used vehicles c. Primary residences d. All of the above
d. All of the above
2. In which of the following ways do SECU's lending programs help fulfill our vision and values? a. First time homebuyers program and 100% financing options for all borrowers b. Personal loans c. Grassroots articles d. All of the above
d. All of the above
24. When submitting a loan to the Member Loan Review Committee (MLRC), what information should the lending officer provide? a. Application and credit report b. Supporting documentation such as income verification c. Explanations of any credit exceptions d. All of the above
d. All of the above
3. Which bylaw represents SECU's vision and values? a. To provide an opportunity for members to improve their economic and social condition b. To encourage thrift among members c. To create a source of credit at a fair and reasonable rate of interest d. All of the above
d. All of the above
7. Which of the following are acceptable forms of income verification? a. Current paystub or Leave and Earnings Statement (LES) b. Separation agreement or divorce decree c. W-2 statement or tax returns d. All of the above
d. All of the above
10. Members may have which of the following pay frequency types? a. Weekly b. Bi-weekly c. Semi-monthly d. Monthly e. Any of the above
d. Any of the above
9. For which of the following reasons would a lending officer want to verify a borrower's income? a. Frequent changes in employment b. Recent late payments on the borrower's credit report c. If the stated income does not seem reasonable based on the borrowers occupation d. Any of the above
d. Any of the above
9. When a loan advance is keyed, ALS does which of the following automatically? a. Extends the loan b. Calculates the new payment c. Updates the automated payment method d. B and C only
d. B and C only
13. A Leave and Earnings statement (LES) is a type of pay advice received by which of the following? a. SECU Board of Directors b. Civilian employees of the federal government c. Members of the military d. Both B and C e. All of the above
d. Both B and C
21. External subordination requests will be approved if the borrower's first mortgage has which of the following features? a. Balloon payment b. Creative owner financing c. Recapture provision d. None of the above
d. None of the above
19. What is the purpose of the IRS Form 4506-C? a. To document farm income b. To itemize interest and dividend income c. To record rental income d. To allow the Credit Union to directly request transcript of the borrower's tax returns from previous years
d. To allow the Credit Union to directly request transcript of the borrower's tax returns from previous years
25. The Member Loan Review Committee is comprised of which of the following? a. Area lending officers b. VPs and SVPs c. The president of SECU and the SVP of Loan Administration d. Volunteer members
d. Volunteer members
19. The Escrow department must disburse insurance proceeds for property damage if which of the following apply? a. The loan is an investor loan b. The property is a total loss c. The property taxes have not been paid d. All of the above e. A and B only
e. A and B only
7. How does the Credit Union use the interest earned from loans made to members a. Pay interest on deposit accounts b. Pay operating expenses such as salaries, utilities, etc. c. Pay stockholders d. All of the above e. A and B only
e. A and B only
7. Which of the following are acceptable sources to use when determining a vehicle's value? a. NADA b. MSRP on vehicle's window sticker c. CARFAX d. All of the above e. A and B only
e. A and B only
22. The Servicemembers' Civil Relief Act (SCRA) applies to which type of loan? a. Personal loans b. Mortgage loans c. Credit cards d. All of the above e. A and C only
e. A and C only
3. Salary Advance loans are a benefit to borrowers in which of the following ways? a. No fee b. Low interest rate c. Creates a savings program to help break the cycle of payday advances d. All of the above e. A and C only
e. A and C only
23. The Member Loan Review Committee (MLRC) is _______ a. Compromised of paid state employees b. The final authority on all lending decisions put before them c. Unable to approve loans beyond the Board mandated policies, unless specifically allowed by the Board of Directors d. All of the above e. B and C only
e. B and C only
9. Which characteristics best describe a successful lending officer? a. Satisfies members by making all loan requests b. Has knowledge about SECU loan products and services c. Appropriately handles confidential member information d. All of the above e. B and C only
e. B and C only
