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The penalties for violations of the Military Lending Act (MLA) are harsher than for other consumer protection regulations. Which penalties might a bank expect to incur for a violation of the MLA rule? A. Fines and imprisonment for up to ten years B. Criminal penalties and costs of the action C. Loss of the bank's charter D. All penalties associated with a violation of the Equal Opportunity Act (Regulation B)

10ML. Incorrect. The correct answer is b. A is incorrect because the term of imprisonment is up to one year. C is incorrect because the bank would not lose its charter for violating the MLA rule. D is incorrect because, although all loans are subject to the Equal Credit Opportunity Act and Regulation B, a violation of certain of provisions of the Truth in Lending Act (Regulation Z) is a violation of the MLA rule.

3z. The CARD Act states that there must be 21 days between the date the statement is mailed or delivered and the "payment due date." The "payment due date" is "generally the date by which the creditor requires the consumer to make the required minimum periodic payment in order to avoid that payment being treated as late for any purpose." This rule applies to which types of products? A. Credit cards and—if a grace period applies—all other open-end lines of credit B. Credit cards only C. Credit cards and overdraft lines of credit only D. Home equity lines of credit and credit cards only

The correct answer is A. B, C, and D are incorrect because this rule applies to credit cards and to all open-end lines of credit that have a grace period.

Banks sometimes release funds for personal checks before the bank can know the check is fraudulent. Why does a bank do this? A. Banks have a way of knowing that the check or money order is good just by looking at it B. Federal law requires banks to give customers access to money from checks or money orders within a specific time-frame C. Banks want to provide great customer service and allowing access is one way to do that D. Most checks are ''good'', so the risk to the bank and the customer of making funds available is very low

The correct answer is B. A is incorrect because it is often very difficult to tell if a check is good just by looking at it. C and D are incorrect because, although banks do want to provide good customer service, the risk to the bank and the customer due to fraudulent or counterfeit items is substantial.

In the small bank performance standards, which of the following is NOT a criterion? A. The bank's CRA strategic plan B. The bank's loan-to-deposit ratio C. The geographic distribution of loans D. The percentage of loans within the bank's assessment area(s)

The correct answer is a. 12 CFR 228.26; 12 CFR 345.26; 12 CFR 25.26; 12 CFR 195.26 Outline III D(2) Under the small bank performance standards, the bank is not required to have a CRA strategic plan.

The Fair Housing Act prohibits discrimination based on which factors by any person whose business includes engaging in residential real estate-related transactions? A. Race, color, religion, sex, national origin, familial status, or handicap B. Unfair and deceptive acts and practices in real-estate lending C. FHA List of Discriminatory Actions against governmental agencies D. Ability to repay under the Truth in Lending Act and Regulation Z

The correct answer is a. B, C, and D are incorrect because the Fair Housing Act does not prohibit discrimination based on these factors.

1. Under the Mortgage Servicing Rules, a subsequent rate reset notice is required in certain instances. Which option describes when a subsequent rate reset notice is required? A. 30-year adjustable rate mortgage secured by the borrower's principal dwelling B. 1-year adjustable rate construction loan to build the borrower's principal dwelling C. 15-year adjustable rate mortgage secured by the borrower's fleet of commercial vehicles D. 5-year adjustable rate mortgage secured by the borrower's vacation home

The correct answer is a. B, C, and D are incorrect because the subsequent rate reset notice is not required for these loans. The subsequent rate reset notice requirement applies to closed-end consumer credit transactions (first and subordinate liens) secured by the consumer's principal dwelling for which the APR may increase after consummation and are not required for ARMs with terms of one year or less such as construction loans.

James is African-American. He lives in a community that is predominately African-American. At his local bank, he asked to speak to a loan officer about a car loan. The customer service representative explained that the loan officer was out to lunch and told him to come back later. James asked when would be a good time to return and the CSR replied, ''I am really not sure.'' Just as James was ready to leave, Phil, a well-dressed white man came in and asked about a loan. The CSR explained that the loan officer was out, but she expected him back in about 30 minutes. She offered to make an appointment for Phil, and to call him when the loan officer arrived. What example does the CSRs actions primarily represent? A. Unfair treatment B. Illegal discrimination C. Neither unfair treatment or illegal discrimination D. Acceptable treatment since no one was available

The correct answer is b. A is incorrect because this situation goes beyond unfair treatment. To say that it is primarily unfair treatment ignores the illegal discrimination that is evident. C is incorrect because this is definitely an example of illegal discrimination as well as unfair treatment. D is incorrect because the CSR could have been more helpful in responding to James' query.

There are certain instances when taking a prohibited basis into consideration is allowed. One example of when you may consider a prohibited basis when evaluating a credit decision would be the marital status of the applicant. Which situation best describes when you can consider marital status when evaluating a credit request? A. You may never consider marital status when evaluating a credit request B. You may consider marital status when it could affect your rights to any collateral for a loan C. You may consider marital status in evaluating whether a female applicant will be starting a family soon and may quit her job and lose her income D. You may consider marital status when determining a preferable rate structure for a loan product designed for married applicants

The correct answer is b. A is incorrect because you may consider marital status when it could affect your rights to any collateral for a loan. C is incorrect because this activity is prohibited by the FHA. D is incorrect because the ECOA only allows a bank to provide more preferable rates and terms to customers age 62 and older.

Barry is conducting a loan interview with a client, asks these two questions: 1) What country are you from? 2) How long will you receive alimony and child support? Which statement is true regarding the legality of the questions? A. Neither Question 1 or 2 are illegal B. Only question 1 is illegal C. Only question 2 is illegal D. Both questions are illegal

The correct answer is b. A, C, and D are incorrect because the way question number one was asked, asking about which country the client is from, is illegal. The banker can, however, ask about the immigration status of a client. A Question about how long a particular source of income is expected to last is allowable as long as the customer wishes to rely on that income to qualify for the loan.

An insured depository institution ("IDI") is required to comply with the information technology requirements of 12 CFR Part 370 if during the two consecutive preceding quarters the IDI had: A. One million or more deposit accounts B. Two million or more deposit accounts and at least $10 billion in assets C. Two million or more deposit accounts D. At least $10 billion in assets

The correct answer is c. 12 CFR 370 - 1Outline VIII

Susannah has come to your bank to request a remittance transfer to her brother in Sweden. The rule requires you to provide Susannah with a prepayment disclosure at what point in time? A. The prepayment disclosure must always be provided concurrently with the receipt B. The prepayment disclosure is only required if the customer requests it C. The prepayment disclosure must be provided at the time of the transfer request but prior to payment and a providing the receipt D. A prepayment disclosure is not required unless a consumer requests the remittance in person

The correct answer is c. A is incorrect because although a combined prepayment disclosure and receipt may be used, it is not required. B and D are incorrect because a prepayment disclosure is required regardless of whether or not the customer requests it or whether the remittance is done in person or remotely.

FHA requires which phrase to be included in radio advertisements for real estate loans? A. An equal lender B. A nondiscriminatory lender C. Equal housing lender D. An equitable lender

The correct answer is c. A, B, and D are incorrect because the phrase is ''equal housing lender.''

A customer calls to notify the bank that a withdrawal made at an ATM located in a local supermarket has been debited from the wrong account. The bank employee applies the point-of-sale error resolution procedures. What should the bank do? A. Ask the supermarket to credit the customer's account B. Freeze the customer's account until the problem can be resolved C. Retrain the employee to distinguish point-of-sale transactions from ATM transactions D. Provide immediate credit, and file a SAR

The correct answer is c. The employee used the wrong procedures. The ATM transaction is not a point-of-sale transaction, so the bank should first retrain the employee.

Which of the following is the best method for a large bank to use in monitoring its CRA performance? A. Review the effectiveness of marketing materials. B. Evaluate approval and denial rates for minority loan applicants. C. Perform a quarterly evaluation of the bank's loans-to-deposits ratio. D. Perform a geographic analysis of lending levels and dispersion of loans.

The correct answer is d. 12 CFR 228.22; 12 CFR 345.22; 12 CFR 25.22; 12 CFR 195.22 Outline III (B) This method results in an objective look at the bank's lending pattern and can give the bank a realistic picture of its CRA efforts.

With which law does a loan program comply if it is specifically designed to meet the credit needs of low and moderate income individuals? A. Home Mortgage Disclosure Act B. Fair Housing Act C. Truth in Lending Act D. Community Reinvestment Act

The correct answer is d. A is incorrect because HMDA is an information-reporting act and does not encourage any particular lending. B is incorrect because this is not an individual loan transaction. C is incorrect because the TILA does not address meeting the needs of low/mod income borrowers.

When the consumer logs onto Silver Bank's online banking, the webpage presents the consumer with the bank's E-SIGN disclosures. Consumers may opt to agree to receive disclosures electronically, or cancel. Regarding this delivery method, which statement is true? A. This is an example of a push system as long as consumers have a choice to push or click on ''Agree'' to receive disclosures electronically B. Demonstrable consent may be assumed even if consumers click on ''Cancel'' because they logged in C. The bank now has consent to push periodic e-statements to a consumer in the same or different format as their other online banking products and services D. This is an example of a pull system for accomplishing demonstrable consent

The correct answer is d. A is incorrect because this is an example of a pull system. B is incorrect because for any delivery method, consumers must consent to the E-SIGN disclosure prior to receiving disclosures electronically. C is incorrect because this is a pull system for delivering electronic disclosures and all documents must be in the same format.

What must any bank that decides to rely on an electronic version of a disclosure do first and foremost to avoid risk of noncompliance with applicable consumer protection laws and regulations? A. Be sure that all customers receive information about the bank's use of electronic disclosures B. Be sure that all impacted customers have access to computers C. Be sure that its customers are informed about fees for paper disclosures D. Be sure to meet the requirements of the E-SIGN Act

The correct answer is d. A, B, and C are incorrect because although E-SIGN disclosures may address these things, your primary concern should be that your bank meets the E-SIGN requirements prior to providing any communications electronically.

First National Bank would like to establish a policy regarding the evaluation of loans that are not subject to the appraisal requirement. Which of the following is acceptable in this policy? A. All loans under $250,000 secured by real estate must have an evaluation in the file. B. All loans that do not require an appraisal by a state-certified appraiser must have an evaluation. C. The evaluations generally will be performed by the loan officer responsible for the transaction. D. Evaluations may be performed by any loan officer in either commercial or consumer lending as well as any credit analyst.

. The correct answer is a. Various regulatory issuances Outline V According to the appraisal regulation, evaluations are required if the loan is exempt from the requirement to obtain an appraisal under either the business loan exemption, the renewal exemption, or the $250,000 threshold rule. Therefore, although the policy is more expansive than it needs to be, answer (a) is correct. An appropriate category for requiring evaluation is real estate loans under $250,000. Answer (b) is incorrect because, while a loan may not require an appraisal by a state-certified appraiser, it may need an appraisal by a state-licensed appraiser. The last two answers are also incorrect because the regulatory issuances clearly define the persons eligible to perform evaluations for the bank. A loan officer responsible for the loan would not meet the independence criteria. Also, a person performing an evaluation must have real estate training or experience. It is unlikely that all loan officers and credit analysts would have the necessary training or experience.

Which item is one of the three new mortgage loan servicing requirements under TILA? A. Community reinvestment requirements B. Accurate credit bureau reporting requirements C. Fair Lending requirements D. Prompt crediting of mortgage payments requirements

Correct. The correct answer is D. A, B, and C are incorrect because they are not mortgage servicing requirements under TILA.

Which of the following institutions could be examined for CRA under the intermediate small bank performance standard? A. Bank A, a $230 million bank B. Bank B, a $700 million bank C. Bank C, a $50 million bank D. Bank D, a $2 billion bank

. The correct answer is b. 12 CFR 228.12 (u); 12 CFR 345.12 (u); 12 CFR 25.12 (u); 12 CFR 195.12 (u) Outline III D(1) - To be an intermediate small bank, the bank itself must have more than $313 million and less than $1.52 billion in assets.

2C. The correct answer is a. 12 CFR 228.26; 12 CFR 345.26; 12 CFR 25.26; 12 CFR 195.26 Outline III D(2) Under the small bank performance standards, the bank is not required to have a CRA strategic plan.

Your bank is making a designated loan on a vacation home that requires flood insurance. The insurable value of the home is $150,000 and the amount of the loan is $145,000. What is the minimum amount of flood insurance required? A. $100,000 B. $145,000 C. $150,000 D. $250,000

10FLOOD. The correct answer is b. A, C, and D are incorrect because the minimum flood insurance amount required is the lesser of the maximum amount of coverage available under the NFIP for the particular type of building, the insurable value, or the outstanding principal balance of the loan.

Timothy Edwards inherited some money from his father and decided to put the funds in several accounts at First National Bank. Timothy has an individual savings account with a balance of $1,400,000. He and his wife, Sylvia, have a savings account with a balance of $750,000. They also have a joint NOW account with a balance of $280,000. In addition, they have the following trust accounts for their children, John and Suzanne: Timothy, trustee for John (balance $195,000); Timothy, trustee for Suzanne (balance $195,000); Sylvia, trustee for John (balance $120,000); Sylvia, trustee for Suzanne (balance $120,000). What is the total balance in the accounts of this family that is covered by deposit insurance, assuming a SMDIA of $250,000? A. $1,380,000 B. $1,660,000 C. $1,130,000 D. $1,140,000

11FDIC. The correct answer is a. 12 CFR 330.6, 330.9, and 330.10 Outline III A, B, and C The individual savings account owned by Timothy is covered as a single ownership account. $250,000 of it is insured. The savings account and NOW account are joint ownership account and is separately insured, but only for a total of $250,000 for each owner. The rest is uninsured. The other revocable trust accounts would be insured for the full balances since the beneficiaries are natural persons.

In evaluating a bank's CRA performance, to what do bank examiners give the greatest consideration? A. Efforts to analyze the geographic origins of its deposit base B. Efforts to establish communication with members of the community regarding credit needs C. Participation of the bank's board of directors in formulating CRA policy D. Extensions of credit the bank has made where the financing benefits low- and moderate-income borrowers or neighborhoods

12C. The correct answer is d. 12 CFR 228.22; 12 CFR 345.22; 12 CFR 25.22; 12 CFR 195.22 Outline III (B)(1)(b) The purpose of CRA is to encourage lending in low- and moderate- income level neighborhoods.

The Military Lending Act (MLA) defines a covered borrower as a member of the armed forces serving on active duty or active guard and reserve duty or a dependent, which includes the spouse of a member of the armed services. Which person is a covered borrower under the MLA? A. Corporal Lopez, who established a line of credit prior to serving on active duty B. Julie Williams, a customer who was on active duty at the time the account was established but has retired C. Dean Clark, the spouse of an active member of the armed services D. Martin Lee, the father of an active duty servicemember who guaranteed the loan for his son.

12ML. Correct. The correct answer is c. A is incorrect because the loan is a pre-service debt, which is covered under the Servicemember Civil Relief Act (SCRA) but not the Military Lending Act (MLA) rule. B is incorrect because individuals who are no longer on active duty are not covered borrowers even if they were covered when the account was established. D is incorrect because the guarantor of the loan is not in the military service or a ''dependent'' of someone in the military.

Bretta applied for a teller position and the bank informed her that they would obtain a consumer report. Before the bank rejected her application, they gave her a copy of the consumer report the bank relied on to make its decision with a copy of ''A Summary of Your Consumer Rights Under the Fair Credit Reporting Act.'' Why did Brett receive this information? A. It lets Bretta know that the bank was on to her, so she need not disagree with the decision B. It lets Bretta know not to bother applying with the bank for credit C. It provides Bretta the opportunity to review the report in advance and advise the bank if it was inaccurate D. It allows Bretta to obtain a free copy of her consumer report, otherwise there would be a charge for it

2F. Correct. The correct answer is c. A, B, and D are incorrect because, providing the individual with the consumer report and notice allows them to dispute incorrect information in regard to an employment decision based on inaccurate consumer report data.

Your bank made a loan secured by improved real property that is located in a special flood hazard area. In reviewing the file, you discovered that the customers allowed the flood insurance on the property to expire. You sent a 45-day notice to the customers, and as of today have not received a response from them. What should the bank do? A. Document the loan as an exception to policy B. Report the loan to FEMA C. Purchase flood insurance for the borrower at the bank's expense D. Purchase flood insurance for the borrower at the borrower's expense

2FLOOD. The correct answer is d. A, B, and C are incorrect because, after the bank has provided the borrower with the appropriate 45-day notice, the bank is required to purchase the insurance. This is referred to as forceplacing the insurance for the borrower.

3C. The correct answer is d. 12 CFR 228.22; 12 CFR 345.22; 12 CFR 25.22; 12 CFR 195.22 Outline III (B) This method results in an objective look at the bank's lending pattern and can give the bank a realistic picture of its CRA efforts.

Walt is new to Human Resources and has been told he needs to obtain a consumer report on the four individuals sitting in the waiting area outside his office. They are Cady, who is applying for an open teller position; Henry, who is applying for a promotion from CSR to Branch Manager; Luke, a teller who has is suspected of theft; and Bo, who has asked to be reassigned to a different branch closer to home. Walt is unsure of the circumstances in which he does not need to obtain written permission. What would you advise Walt? A. He does not need to obtain written permission from Cady B. He does not need to obtain written permission from Luke C. He does not need to obtain written permission from Henry D. He does not need to obtain written permission from Bo

3F. The correct answer is b. A, C, and D are incorrect because the employer does not need permission to obtain a consumer report on an employee if that employee is suspected of misconduct relating to employment or violating the law, rules of self-regulatory organization, or the bank's written rules or policies.

A bank received a signed letter criticizing its performance in meeting the credit needs of the community, but not adversely reflecting upon any individual bank employee's reputation. What must the bank do with this letter? A. Have it reviewed and discussed by the board of directors B. File it with the regional office of the bank's federal regulator C. Retain it in the CRA public comment file D. Answer it within 10 business days

4C. The correct answer is c. 12 CFR 228.43(a)(1); 12 CFR 345.43(a)(1); 12 CFR 25.43(a)(1); 12 CFR 195.43(a)(1) Outline II E(1)(a) CRA does not require the bank to answer the writer, nor to take specific actions, such as reporting it to the board of directors or sending it to its regulatory agency. However, the bank must place the comment in its CRA public file. The bank may place a response to the comment in the file also. However, if the comment or bank response would adversely affect the good name or reputation of a person other than the bank, or if it would violate a law (for example, the privacy regulation) it should not be placed in the file.

For exemptions of certain detached structures from the mandatory flood insurance purchase, which statement is true? A. Flood insurance is never required for a greenhouse B. Flood insurance is not required on any commercial structure if it is detached from the primary commercial structure C. Flood insurance is not required on any structure on a residential property if it is detached from the primary residential structure and also serves as a residence D. Flood insurance is not required for the detached structures on a loan made for business, commercial, or agricultural purposes if the loan is secured by a residence and part of the residence includes detached structures which meet the requirements of the exception

4FLOOD. The correct answer is d. A is incorrect because the greenhouse may add value to the property and the bank may want to require flood insurance on that structure. B is incorrect because the primary structure must be a residential structure. C is incorrect because the detached structure serves as a residence and, therefore, cannot be exempt.

When maintaining an account involving a fiduciary, what must be done with the evidence of the fiduciary relationship? A. It may be kept by the depositor in his or her records at home or at his or her place of business. B. It must be expressly disclosed in the deposit account records. C. It may be maintained by the depositor or the bank as long as the records are clear. D. It must be forwarded to the FDIC at the time of account opening.

6FDIC. The correct answer is b. 12 CFR 330.5(b) Outline IV

Which option describes the types of loans that are subject to the mandatory requirement to purchase flood insurance? A. If the building or mobile home attached to real property securing the loan is located in special flood hazard area, A or H B. If the building or mobile home attached to real property securing the loan is located in special flood hazard area, H or B C. If the building or mobile home attached to real property securing the loan is located in special flood hazard area, A or V D. If the building or mobile home attached to real property securing the loan is located in special flood hazard area, B

6FLOOD. The correct answer is c. A, B, and D are incorrect because all special flood hazard areas begin with an A or a V. If a building or mobile home attached to real property securing a loan is in one of these areas or will be in one of these areas, flood insurance is required.

Which of the following criteria accurately describes a small business loan for which a large bank must annually report data? A. A loan to a business that employs fewer than 50 people B. A line of credit to a business with assets of less than $5 million C. A loan to a business in an amount of $1 million or less D. A loan to a business that does not generally have access to regional or national credit markets

8C. The correct answer is c. 12 CFR 228.42; 12 CFR 345.42; 12 CFR 25.42; 12 CFR 195.42 Outline II B(1)(c)(i) - CRA requires large institutions to report data on small business loans. The reporting requirement is limited to business loans of $1 million or less.

Which situation would require flood insurance under the Flood Disaster Protection Act? A. A loan secured by a residence located in flood zone B B. A loan secured by a vacation home and 40 acres located in flood zone V C. A loan secured by a commercial building located a flood zone C D. A loan secured by vacant land located in flood zone AE

8FLOOD. The correct answer is b. A, C, and D are incorrect because the bank must require flood insurance for buildings or mobile homes attached to real property that are or will be in a special flood hazard area. These zones always begin with an A or a V. If a loan is secured by unimproved real property and the proceeds of the loan are not for the purpose of placing any improvements on the property, the requirements of the Flood Disaster Protection Act do not apply.

Which option is information included in the sale or transfer rules notice requirements? A. A disclosure of the long-term performance of the originator's loans B. The location where ownership of the loan is recorded C. The percentage of fees that can be refunded if the loan is sold or transferred D. When a payoff statement will be provided

The correct answer is B. A, C, and D are incorrect because notice requirements must contain the contact information for any agents used by an owner to receive legal notices and resolve payment issues and a disclosure of the location where ownership of the loan is recorded. If a transfer has not been recorded in the public records at the time the notice is provided, a new owner may satisfy this requirement by stating that fact.

In 2010, the Federal Reserve issued final rules which amend Regulation Z, adding provisions regarding specific prohibitions on loan originator compensation to protect consumers from unfair or abusive lending practices. The rule contains three basic prohibitions. Name one of the prohibitions. A. Prohibits mortgage loan originators from steering consumers to shorten or waive the waiting periods after receiving TILA disclosures B. Prohibits basing originator compensation on a term of the transaction C. Prohibits anyone other than the bank from compensating the originator D. Prohibits mortgage loan originators from handling HELOCs and timeshare plans

The correct answer is B. A, C, and D are incorrect because they are not prohibitions of the rule regarding mortgage loan originator compensation.

A qualified mortgage (QM) must meet certain specific loan requirements Which option is one of the three categories that define a qualified mortgage? A. The QM establishes community reinvestment criteria B. The QM focuses on prohibiting certain risky features and practices C. The QM establishes limits on loan amounts D. The QM eliminates certain underwriting criteria for covered loans

The correct answer is B. A is incorrect because the qualified mortgage does not establish community reinvestment criteria. C is incorrect because the qualified mortgage establishes limits on certain loan costs, not loan amounts. D is incorrect because the qualified mortgage establishes (does not eliminate) certain underwriting criteria for covered loans.

6z. Alice just received her monthly credit card statement. Which information might Alice NOT expect to see on the statement? A. A toll-free number for credit counseling B. The amount of the payment and the due date of the payment C. A maximum payment warning stating that not paying interest is a violation of the credit card agreement D. The monthly payment amount required for a consumer to eliminate the outstanding balance in 36 months if no further advances are made

The correct answer is C. A, B, and D are incorrect because Alice would expect this information on her statement.

To prevent online bill payment fraud, banks have various control procedures in place. Which option correctly lists some of those control procedures? A. Implementing transaction volume, amount limits, call-back, and dual control procedures B. Encouraging employees to use passwords that are easily remembered and infrequently changed C. Encouraging commercial customers to allow less restrictive access to any computer used for automated clearinghouse (ACH) transactions or account access D. Allowing bank employees to download attachments and click links if they promote greater efficiency

The correct answer is A. B is incorrect because banks should require employees to use strong passwords and to change them often. C is incorrect because banks should advise commercial customers to restrict access to any computer used for ACH transactions or account access. D is incorrect because bank employees should not download attachments or click links, no matter how helpful or harmless they seem and regardless of who sent them.

Which statement regarding the mortgage loan compensation rule is true? A. A creditor may pay one loan officer more than it pays another loan officer, so long as each loan originator receives compensation that is not based on the terms or conditions of the transactions delivered to the creditor B. The rule allows a mortgage broker or loan officer to receive payments directly from a consumer while also receiving compensation from the creditor or another person C. Affiliates do not have to be treated as a single ''person'' for purposes of the rule D. Payment of a salary or hourly wage to a loan originator violates the mortgage loan originator prohibitions

The correct answer is A. B is incorrect because the rule prohibits a mortgage broker or loan officer from receiving payments directly from a consumer while also receiving compensation from the creditor or another person. C is incorrect because affiliates must be treated as a single ''person'' in order to prevent circumvention of the final rule. D is incorrect because payment of a salary or hourly wage to a loan originator does not violate the mortgage loan originator prohibitions even if the loan originator also receives direct compensation from a consumer in connection with that consumer's transaction.

10. Brooke Trout is age 22 and has just graduated from college. She has a job at the Fish Market for the summer while she looks for permanent employment. She makes $5.00 an hour and works 15 hours per week. Brooke thinks that it would be really cool to have her own credit card, so she applies for a card through Catfish National Bank. What must the bank take into consideration when deciding if it should grant Brooke a card? A. The bank must consider Brooke's ability to make the required payments under the credit card's terms before issuing a new card B. The bank must determine if Brooke has other accounts with the bank C. The bank must ask if Brooke has a cosigner D. The bank must determine if Brooke is likely to get a good job in the future

The correct answer is A. B, C, and D are incorrect because credit card issuers must consider the consumer's ability to make the required payments under the credit card's terms before raising limits or issuing a new card.

Adam submitted a request to the bank for a line of credit using his relative's name. He submitted false tax returns in that relative's name with significantly inflated income, along with required documents that presented forged signatures. The bank relied upon the falsified information to provide a $250,000 line of credit. After making minimal payments, Adam defaulted on the loan. This is an example of what type of fraud? A. Check fraud B. Application fraud C. Phishing (Internent) fraud D. Wire fraud

The correct answer is B. A is incorrect because check fraud involves altered, forged or counterfeit checks. C is incorrect because phishing involves fake websites or tricking an individual into downloading computer viruses that steal personal information. D is incorrect because wire fraud involves attempts to steal people's financial information, which can then be used to access the fraud victim's bank accounts.

Cyber criminals use a variety of tactics to gain information or pressure branch or call center representatives into proceeding with a telephone or online transaction. Which option identifies a fraud prevention tactic involving two forms of identity verification prior to proceeding with a transaction? A. Spoofing verification B. Multifactor authentication C. Porting phone numbers D. Phishing twice

The correct answer is B. A is incorrect because spoofing involves criminals changing the real caller ID display to a different phone number to hide the criminals' identities or locations. C is incorrect because porting involves transferring phone number between two telephone service providers. D is incorrect because phishing is when a scammer uses fraudulent emails, text messages, or copycat websites to get the customer to share valuable personal information.

Which of the following pieces of information must be included on a periodic statement according to Regulation E? A. The financial institution's business days B. The name of any third party to whom funds were transferred C. A summary of the consumer's liability for unauthorized transfers D. The balance in the consumer's account after each transfer

The correct answer is b. 12 CFR 1005.9(b)

1z. Martin received the required 45 day notice from his credit card issuer stating that his rate will be increasing from a fixed rate of 9 percent to Wall Street Journal Prime+10. Martin has had a lot of unexpected expenses and the balance on his card is $3,000. He does not see how he can afford to make payments under these new terms. What rights does Martin have in regard to the rate increase? A. He can cancel the card but will have to repay the balance according to the new terms B. He cannot do anything because once he has used the card he has automatically agreed to all changes in terms and conditions C. He can continue to use the card but assert his right to pay at the lower rate D. He can cancel the card and pay off the balance at the old rate over a period of not less than 5 years beginning on the effective date of the increase

The correct answer is D. A, B, and C are incorrect because the new terms apply to new charges not existing balances.

What information must be on the 2018 HMDA LAR for home loans on property located within the bank's metropolitan area? A. The state, county, census tract, and metropolitan area of the property B. The address, census tract, and metropolitan area of the property C. The county, address, and fair market value of the property D. The name, address, and metropolitan area of the applicant

The correct answer is a. 12 CFR 1003.4(a)(9) Outline III(B)(12)

Under Regulation E, when a bank imposes a change that increases fees or charges related to electronic fund transfers, or restricts availability of electronic transfers, it must provide notice to its customers. How many days in advance of the change must the bank notify customers? A. 10 B. 15 C. 21 D. 30

The correct answer is a. 12 CFR 1005.6(b) Outline II B(2) Mrs. Walters notified the bank within the time periods prescribed in Regulation E; therefore, she can be held liable only for $50. Her negligence is irrelevant under Regulation E and the Electronic Fund Transfer Act.

Value Inc. is a federally regulated AMC and a subsidiary owned and controlled by ABC bank, a federally insured depository institution. Value Inc. is subject to all of the following requirements EXCEPT: A. The company must register with the State appraiser and certifying licensing agency in all states in which it operates B. The company must maintain compliance with valuation independence standards set forth in the Truth in Lending Act C. The company must require that all appraisals comply with USPAP D. The company must verify that only State-certified or State-licensed appraisers are used for federally related transactions

The correct answer is a. 12 CFR 225.193; 12 CFR 323.11; 12 CFR 34.213 Outline III E(2)(b) If an AMC is federally regulated and a subsidiary owned and controlled by an insured depository institution it is not subject to the requirement to register with a State.

On which of the following deposits is a bank NOT required to give next day availability? A. A cashier's check deposited at a proprietary ATM B. A Social Security check received through the mail to be deposited in the payee's account C. U.S. Postal Service money orders deposited in person to the payee's account D. Cash, where the deposit was made in person to a teller at the depository bank

The correct answer is a. 12 CFR 229.10(c)(v) Outline II A(3) Cashier's checks must be deposited in person to get next day availability.

A senior officer of a bank is considering breaking with tradition and opening the main office for general banking business on Saturdays. Before making the final decision, he requests your input. Which of the following describes the Regulation CC implications of his proposal? A. Saturday is not a ''business day'' under the regulation, and the funds availability schedule will not be affected. B. Funds availability disclosures and lobby notices will have to be revised for all branches. C. An extra day of interest on Saturday deposits will have to be paid. D. Being open on Saturday will shorten hold periods and increase exposure to operating losses.

The correct answer is a. 12 CFR 229.2(g) Outline I B

Creditors must provide three items to the customer at the time an application for an ARM is submitted, before the customer pays a non-refundable fee, or within three business days of receipt of a consumer's application by phone or through an intermediary agent. Which option lists those three items? A. Initial variable rate notice, CHARM booklet, and loan program disclosure for each variable-rate program in which the customer expresses an interest B. CHARM booklet, loan program disclosure for each variable-rate program in which the customer expresses an interest, and subsequent rate reset notice C. Loan program disclosure for each variable-rate program in which the customer expresses an interest, initial variable rate notice, and initial rate reset notice D. Initial variable rate notice, subsequent rate reset notice, and loan program disclosure for each variable-rate program in which the customer expresses an interest

The correct answer is a. B and D are incorrect because the subsequent rate reset notice is not provided at application. C is incorrect because the initial rate reset notice is required when the rate initially resets at a later date.

4ML. The Military Lending Act (MLA) rule requires specific disclosures. How must the disclosures be provided? A. The disclosures must be provided in writing and the statement of the military annual percentage rate (MAPR) and the payment obligation description must also be provided orally, either in person or through a toll-free number B. All disclosures must be provided orally but can be provided using a toll-free 800 number C. Disclosures are not required to be in writing unless the MAPR exceeds 36% D. Oral disclosures must be provided in person

The correct answer is a. B is incorrect because all disclosures must be provided in writing, though some must also be provided orally. C is incorrect because a loan with an MAPR exceeding 36% could not be made to a servicemember. D is incorrect because oral disclosures may be made using a toll-free telephone number.

What is disparate impact? A. Disparate impact is a legal doctrine which means that a policy or practice may be considered discriminatory if it has a disproportionate ''adverse impact'' against any prohibited bases B. Disparate impact is treating one person in a protected class differently than another person C. Disparate impact is the same as redlining D. Disparate impact occurs when the bank does not have the Equal Housing Lender poster posted in the lobby

The correct answer is a. B is incorrect because the practice described is considered discrimination, not disparate impact. C is incorrect because redlining is discrimination against an applicant based on the predominant racial or other prohibited bases characteristics of the persons residing in a particular geographic area---e.g., neighborhood, city or other area. D is incorrect because the poster is required by the FHA but the poster has no relation to disparate impact.

The FHA can assess penalties for violations of the act. Who may be assessed penalties for violating the Fair Housing Act? A. All parties, bank and individual(s), involved in the FHA violation can be penalized B. There are no penalties for the bank or individuals involved in the FHA violation C. The bank involved in the FHA violation can be penalized; individuals cannot be penalized D. The individual(s) involved in the FHA violation can be penalized; banks cannot be penalized

The correct answer is a. B is incorrect because there may be penalties for violation of the FHA. C and D are incorrect because penalties can be assessed to the bank and person(s) involved in the violation.

Which option correctly identifies five areas covered in the Red Flags Rule that must be addressed in a bank's Red Flag Program? A. Covered accounts, a written program, appropriate responses, staff training, and oversight of service providers B. Appropriate responses, vendor training, covered accounts, oversight of service providers, and a written program C. Staff training, the bank's Customer Identification Program (CIP), covered accounts, appropriate responses, and oversight of service providers D. Covered accounts, appropriate responses, staff training, robbery procedures, and a written program

The correct answer is a. B is incorrect because vendor training is not required to be addressed in a bank's Red Flag Program. C is incorrect because CIP is not required to be addressed in a bank's Red Flag Program. D is incorrect because robbery procedures are not required to be addressed in a bank's Red Flag Program.

Under the Mortgage Servicing Rules, a subsequent rate reset notice is required in certain instances. Which option describes when a subsequent rate reset notice is required? A. 30-year adjustable rate mortgage secured by the borrower's principal dwelling B. 1-year adjustable rate construction loan to build the borrower's principal dwelling C. 15-year adjustable rate mortgage secured by the borrower's fleet of commercial vehicles D. 5-year adjustable rate mortgage secured by the borrower's vacation home

As a new receptionist at the bank, Yushiko needs to comply with fair lending laws and has asked her manager for some suggestions for best practices related to her job of greeting applicants, referring applicants to the appropriate lenders, and providing brochures and information that meets the inquirers' needs. Which answer provides the best practices that Yushiko should follow? A. Greet each customer as soon as possible after he or she enters the lobby, inform all clients about the credit products in which they may be interested, and make appointments on a consistent basis for the inquirers to see credit officers B. Provide brochures only to inquirers that appear serious about the products. You do not want to waste resources if the inquirers are not interested or do not look like they could qualify for the products C. If two inquirers enter the bank lobby, quickly assess which one appears to qualify for credit and wait on that person first D. Encourage wealthy-looking persons to make appointments with loan officers and discourage anyone that looks like they could not afford the payments from making appointments with loan officers

The correct answer is a. B, C, and D are incorrect because you should treat all inquirers the same and not make any assumptions about them.

GLBA guidelines define "sensitive customer information." Which item below would be considered sensitive customer information? A. A customer's Social Security number, personal identification number, or account number B. A customer's name and address from the telephone directory C. Public records found at the courthouse D. A customer's email address as found in an internet search

The correct answer is a. B, C, and D are incorrect because, although these types of information about a customer might be considered sensitive, they are not part of the definition of sensitive customer information under GLBA.

Mr. Hilliard applied to First National Bank for a car loan. The bank requested a credit report on Mr. Hilliard from the local credit reporting agency and found that he had almost no credit. No negative items were on the report. In addition, Mr. Hilliard had been employed at his job for four months and his previous work experience was difficult to verify. The bank denied his application for a loan and sent him an adverse action notice. What should the bank do under the Fair Credit Reporting Act? A. Notify Mr. Hilliard that a credit report was obtained and give him the name and address of the credit bureau. B. Nothing. The bank has no responsibilities under the Fair Credit Reporting Act because the credit report contained no adverse items. C. In person or over the telephone, explain to Mr. Hilliard that, although the credit report had no negative items, he has too little credit history. D. Give Mr. Hilliard a copy of the credit report.

The correct answer is a. Fair Credit Reporting Act, Section 615(a) and 15 USC CH41 1861m Outline III A(1) That information on the credit report was partially responsible for the credit denial gives rise to the responsibility to report it to the consumer. Even too little credit history is enough reason to report under the Fair Credit Reporting Act. In addition, under ECOA's Regulation B, the reasons for credit denial must be provided either automatically or on request after notice of that right is provided.

First National Bank is expanding its deposit services and would like to send out debit cards to a group of its customers. However, these cards have not been requested by the customers and the bank does not want to violate Regulation E. How can First National accomplish this? A. No cards may be sent except in response to a request. The bank must send letters soliciting a request for the cards. B. Cards may be sent if they are not validated, if disclosures of consumer's rights are enclosed, and if the card can only be validated by a request from the consumer with proper identification. C. No cards may be sent and no direct solicitation for cards may be made. The bank must rely on general advertising. D. Ready-to-use cards may be sent to the customers provided proper disclosures of the consumer's rights are included along with a notice that use of the card will validate it for all purposes.

The correct answer is b. 12 CFR 1005.5 Outline II D Access devices may be sent to customers who have not requested them provided the device is not validated, the consumer's rights disclosures accompany the device, an explanation of how the device can be validated is included, and the institution validates the device only after a request and with reasonable means of identification such as photograph, fingerprint, or signature.

Which of the following institutions is exempt from the coverage of CRA? A. State National Bank of Ashgrove, a $15 million bank in a rural community, not located in an MSA B. Trust Company, Inc., an institution offering only trust services located in a large urban area C. ACME Savings Association, a federal thrift institution located in a medium-sized midwestern city, included in an MSA D. First National Bank, a $250 million bank located in a rural area, not in an MSA

The correct answer is b. 12 CFR 228.11(c)(3); 12 CFR 345.11(c)(3); 12 CFR 25.11(c)(3); 12 CFR 195.11(c)(2) Outline I - Certain special purpose banks that do not perform commercial or consumer banking services and banks that engage only in one or more of the following activities: providing cash management controlled disbursement services or serving as correspondent banks, trust companies, or clearing agents are exempt from the coverage of CRA.

Assuming that the following are interest-bearing accounts at First National Bank and the SMDIA is $250,000: Single Accounts Balances Joint Accounts Balances Jim $300,000 Jim and Fred $180,000 Fred $350,000 Fred and Jim $160,000 Susan and Jim $200,000 How much of Fred's money is covered by deposit insurance? A. $520,000 B. $420,000 C. $350,000 D. $170,000

The correct answer is b. 12 CFR 330.6 and 330.9(b) Outline III A and B Fred's single ownership account is insured only to $250,000 and $100,000 is uninsured. His one-half interest in the $180,000 joint account and his one-half interest in the $160,000 joint account are fully insured for $170,000 total.

Greg Smith, a real estate lending officer at XYZ Bank, is planning to make a $500,000 loan to Milton Womack, a good customer, to purchase a piece of commercial real estate from a local real estate broker. The loan will have a loan-to-value ratio of 75 percent. Mr. Womack has offered Greg an appraisal given to him by the seller of the property. The appraisal is very complete and is approximately three months old. Greg would like to waive the normal appraisal requirement and simply have the original appraiser update the seller's appraisal because this would save Mr. Womack the money a new appraisal would cost. Can Greg legally use the updated appraisal? Why or why not? A. Yes. Greg may use the appraisal provided it goes through the bank's established appraisal review process. B. No. Greg may not use the appraisal because the appraiser was not engaged by another financial institution. C. No. Greg may not use the appraisal because it is too old. D. Yes. Greg may use the appraisal because it was done so completely, provided he knows the appraiser and has confidence in his work Therefore, answer (a) is incorrect. Answers (c) and (d) are also wrong because regardless of the date of the appraisal, or the bank's confidence in the appraiser, the appraisal may not be used.

The correct answer is b. 12 CFR 34.45(b), 12 CFR 225.65(b), 12 CFR 323.5(b) and 12 CFR 164.5(b) Outline III C Under the appraisal regulation, an appraisal prepared for another financial services institution that otherwise meets the requirements of the regulation is acceptable. In this case, the bank needs its own, new appraisal because the real estate broker is not a financial services institution. Therefore, answer (a) is incorrect. Answers (c) and (d) are also wrong because regardless of the date of the appraisal, or the bank's confidence in the appraiser, the appraisal may not be used

Bennington Bank has offices all over the metropolitan area, with four of its offices in predominately Korean areas. These offices are staffed with Korean-speaking tellers and customer service representatives and the signage is predominately in Korean. The bank advertises the availability of remittances at these offices in Korean-language newspapers and ethnic Korean grocery stores in the area of the branches. What would these four branches be required to do? A. Offer disclosure written in English but explained orally in Korean B. Provide both Korean and English language disclosures for remittance transfers C. Provide Korean language disclosures but only upon request D. Provide only English disclosures

The correct answer is b. A is incorrect because disclosures must be provided entirely in Korean, not half and half. C and D are incorrect because, if a bank advertises or otherwise promotes remittance transfers in a foreign language, all disclosures must be provided in that language and English.

Which statement is true? A. The E-SIGN Act mandates electronic disclosures for all consumer and commercial customers who wish to use online banking B. The E-SIGN Act gives electronic disclosures the same validity as paper disclosures as long as the disclosure and consent provisions of the E-SIGN Act are met C. The E-SIGN Act applies only to consumer customers D. The E-SIGN Act applies primarily to consumers using mobile banking and remote deposit capture

The correct answer is b. A is incorrect because the E-SIGN Act does not mandate electronic disclosures. C is incorrect because the E-SIGN Act itself applies to both consumer and commercial transactions. Only the consent provision of the E-SIGN Act applies to consumers. D is incorrect because the E-SIGN Act applies to required disclosures that are provided electronically and not to specific bank activities.

The Military Lending Act (MLA) regulation prohibits providing a consumer loan with a military annual percentage rate (MAPR) that exceeds 36%. Which statement is true regarding the MAPR? A. The MAPR does not include credit insurance but the annual percentage rate (APR) does B. The MAPR includes fees that are not considered ''finance charges'' under Regulation Z C. The MAPR is the same as the APR under Regulation Z D. This is a trick question because the MAPR can never exceed 26%

The correct answer is b. A is incorrect because the MAPR does include credit insurance and other ancillary fees. C is incorrect because the MAPR differs from the APR as it includes charges excluded from the finance charge under Regulation Z. D is incorrect because the MAPR cannot exceed 36%.

Once a consumer receives the required E-SIGN disclosures, the consumer must provide demonstrable consent. Which customer activity represents demonstrable consent? A. Signing a form at account opening agreeing to receive disclosures electronically B. Clicking on a hyperlink within a PDF document sent by the bank in order to agree to receive electronic disclosures in that format C. Agreeing to receive electronic disclosures using a computer at a customer service representative's desk D. Logging into online banking and choosing a password

The correct answer is b. A, C, and D are incorrect because they are not examples of demonstrable consent.

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. Based on this information, for HMDA purposes, this loan is considered to be which of the following types of loans? A. Consumer RV B. Home equity C. Home improvement D. Second mortgage

The correct answer is c. 12 CFR 1003.2 Outline II(A)(2), (E)(2) The definition of ''dwelling'' includes mobile homes not attached to real property, so it would be HMDA reportable as a home improvement loan.

First National Bank received a notice from James Gilbert that a $500 electronic withdrawal from his checking account, which was shown on his monthly statement, appeared to be an error. What must First National do? A. Investigate the error and make any corrections within 30 calendar days B. Provisionally credit Mr. Gilbert's account for the $500, notify Mr. Gilbert of the credit, investigate the error, and make any corrections within 10 business days C. Provisionally credit Mr. Gilbert's account for the $500 within 10 business days, notify Mr. Gilbert of the credit, investigate the error within 45 calendar days, and make any necessary corrections within 1 business day D. Provisionally credit Mr. Gilbert's account for the $500 within 10 business days, investigate the error, notify Mr. Gilbert of the credit, and make any corrections within 30 calendar days

The correct answer is c. 12 CFR 1005.11(c) Outline II C(4) The bank must either investigate and correct the error within 10 business days or provisionally recredit the account, notify Mr. Gilbert of the recredit, and correct any error within 45 calendar days.

The consumer protections of Regulation E cover which of the following transactions? A. A wire transfer made through the Fedwire system by Bill Rogers to make his mortgage payment B. A $250 automatic transfer made from Ben Stillwater's checking account to his savings account at the same institution C. The check Mrs. Flower gave to the dress shop for her daughter's prom dress and used by the shop to collect information to send a one-time ACH debit to Mrs. Flower's account pursuant to a notice posted in the dress shop D. The $175 loan payment made by Juan Pena to First National by depositing it in one of the bank's ATMs

The correct answer is c. 12 CFR 1005.3(b)(2) Outline I B (4)(g) When a merchant uses a check to obtain account information to initiate an ACH with the consumer's consent, the transaction is covered by Regulation E.

Friendly Service Bank has an affiliated insurance company, FSB Insurance. In which of the following cases would the consumer receiving the marketing materials have to have received the affiliate marketing opt-out opportunity? A. Friendly Service Bank obtains credit score qualification information from FSB Insurance to identify which of the bank's loan customers would be eligible for FSB Insurance's products. The bank sends the qualified customers an FSB Insurance brochure. B. Friendly Service Bank using, a city phone directory, sends a brochure containing marketing materials on its own products, as well as FSB Insurance's products. C. FSB Insurance receives individualized credit score information from Friendly Service Bank about the bank's loan customers. After selecting eligible customers from the list, FSB Insurance sends a qualified list back to Friendly Service Bank who sends the FSB Insurance marketing materials to the selected bank customers. D. Friendly Service Bank sends its own customers a marketing brochure containing information about its own loan products

The correct answer is c. 12 CFR 1022.21 Outline V A(4)(a) The affiliate marketing rules allow the bank to obtain selection information from an affiliate to send marketing materials to its own customers who might be eligible for the products sold by the affiliate without requiring a notice and opt out by the bank's own customers. The bank can send information to individuals whose names are obtained on public lists without giving an opt-out notice, even if some of them happen to be customers of their affiliates. The bank can also market its own products without requiring an opt-out opportunity. However, when an affiliate, such as FSB Insurance, obtains individualized information on the bank's customers and selects them to receive marketing materials, then the opt-out notice requirement is triggered.

If a bank uses a staff appraiser to appraise property that secures loans at the bank, in which case would the appraiser most likely NOT be considered to be independent? A. The appraiser is an employee of the bank's affiliated holding company B. The appraiser is an employee of the bank's affiliated financial institution C. The appraiser is an employee in the commercial loan department D. The appraiser is employed by the bank but reports to the audit department

The correct answer is c. 12 CFR 225.65; 12 CFR 323.5; 12 CFR 34.45; 12 CFR 1AP164.5 Outline III A The appraiser may work for the bank or one of its affiliates, but he or she cannot report to the lending department responsible for approving the loans related to the appraisals.

The following deposits were made on Monday at First National Bank: • Martha Smith, a new customer, deposited $150 in checks into her checking account, which she had opened the previous week • Jerry Williams, an established customer, deposited a $7,000 check from his father • Amanda Thomas, also an established customer, deposited her $600 IRS refund into her account What funds must be made available to these depositors on Tuesday? A. $200 for each B. $200 for Martha and Jerry; $600 for Amanda C. $200 for Jerry; $600 for Amanda D. $200 for Martha; $600 for Amanda

The correct answer is c. 12 CFR 229.10(c)(1)(i) and 229.13(a) and (b) Regulation CC Outline III A, B, and E Jerry's deposit is a check that does not have to be available the next day, with the exception of $200. Because Amanda's check is on the U.S. Treasury, her entire deposit is available the next day. Martha's account is a new account; therefore, none of her deposit is required to be made available on the next business day.

Which of the following accounts is considered to be a new account for delayed funds availability purposes? A. A new account opened by an established customer who has had several transaction accounts with the bank for a long time B. A new account opened by a customer who previously had an account but closed it 15 days before opening the new one C. A new account opened by a customer who has had a regular savings account at the bank for five years D. A new account opened by a customer who is a joint account holder on another checking account at the bank but who has no other individual account

The correct answer is c. 12 CFR 229.13(a) and 229.2(a) Regulation CC Outline I and III E(1) A savings account is not a transaction account and therefore is not an account according to the definition given in Regulation CC. Therefore, the customer has not had an account at the bank at the time the new account was opened, so the new account exception applies.

A compliance officer is monitoring a financial institution's credit reports for compliance with the Fair Credit Reporting Act requirements. Which of the following is NOT a permissible purpose for obtaining and using the consumer report? A. Application to open a new personal deposit account B. Annual review of a personal credit card account before issuing a renewal card C. Review of the personal credit history of a prospective customer on whom the bank officer plans to call D. Application for a commercial loan by an individual where the individual authorized the bank to investigate his credit history

The correct answer is c. 15 USC Ch 41 1681b and 604 Outline II A-F The bank cannot obtain a consumer report without a legitimate credit or employment purpose. The consumer must either apply for credit or employment, or the bank must be planning to make a firm offer of credit in order to obtain a consumer report.

Sally's nephew, Joe, is on a backpacking trip in Germany. Sally resides permanently in Sweden, but is currently in the U.S. visiting relatives, and Joe has texted her saying that he needs funds for some unexpected expenses. Sally comes to your bank with cash and asks to send funds to Joe. Assuming your bank accepts cash wires from non-customers, which statement is true regarding the Remittance rule? A. Sally's request does not fall under the remittance rule because her permanent address is Sweden B. The funds transfer to Joe is not covered because he is not located in the U.S C. Sally does not need to maintain an account with your bank to trigger coverage of this rule D. Your bank may conduct the transfer but no disclosures are required because neither Joe nor Sally are U.S. persons

The correct answer is c. A is incorrect because Sally is making the request for the transfer from a state in the United States when the remittance was requested. B is incorrect because a transfer is only covered if the recipient is located outside the U.S. D is incorrect because the disclosures are required regardless of the nationality of the sender or the recipient.

Chondra is a loan officer at Banking for You. She frequently takes her laptop with her to conferences so she can maintain contact with her customers. Which action would Chandra take to ensure physical security of her laptop and its contents when staying in a hotel at a conference? A. She should leave the laptop in the back seat of her car as long as it is locked B. She should check her laptop with her luggage when she travels by plane to the location of the conference C. She should ensure that the laptop has passwords, encryption, and up-to-date security programs D. If her laptop is stolen at the conference, she should wait until she returns to the bank to report the theft in person

The correct answer is c. A is incorrect because if she has to leave her laptop in the car, she should lock it in the trunk, out of sight. B is incorrect because she should never check her laptop with her luggage when traveling by plane. D is incorrect because she should report the laptop as being stolen to the designated person at her bank immediately upon discovering the loss.

What is the definition of a red flag? A. A pattern, practice, or specific activity that indicates the possible risk of breach of sensitive customer information B. A guide provided by law enforcement for activities that indicate a potential robbery C. A pattern, practice, or specific activity that indicates the possible risk of identity theft D. A guide provided by the FDIC that lists criminal activity that banks should look for when interviewing prospective employees

The correct answer is c. A is incorrect because red flags are not designed to indicate possible breaches of sensitive customer information. B and D are incorrect because the Red Flag Rules were written by the federal banking agencies and do not have anything to do with potential robberies or criminal activities of prospective bank employees.

Which option describes when an initial rate reset notice would be required? A. An interest rate adjustment associated with entering into a loan modification for loss mitigation purposes B. When an open-end account converts to a closed-end adjustable rate mortgage without an initial interest rate adjustment post-conversion C. If the first payment at the adjusted level is due within the first 210 days after consummation of the loan D. If this is an adjustable rate construction loan and the term is one year or less

The correct answer is c. A is incorrect because servicers are not required to provide the initial rate reset notice for interest rate adjustments associated with entering into a loan modification for loss mitigation purposes. B is incorrect because when an open-end account converts to a closed-end adjustable rate mortgage, the initial rate reset notice is not required until the implementation of the initial interest rate adjustment post-conversion. D is incorrect because initial rate reset notices are not required for ARMs with terms of one year or less such as construction loans.

When you use consumer reports to make employment decisions, including hiring, retention, promotion or reassignment, you must comply with the Fair Credit Reporting Act (FCRA). Which statement identifies an important facet of FCRA compliance as it applies to employment? A. Provide an ECOA (Regulation B) adverse action notice if you decline the applicant based on his or her consumer report B. Provide an oral notice to applicants that you might use information in their consumer report for decisions related to their employment C. Certify compliance to the company from which you are getting the applicant or employee's information. You must certify that you complied with all of the FCRA requirements D. Remind applicants that the information you obtain may be used to discriminate against the applicant

The correct answer is c. A is incorrect because the FCRA adverse action notice is required. B is incorrect because the notice must be in writing. D is incorrect because the bank must certify that the information will not be used to discriminate.

2ML. The Department of Defense (DoD) revised their interpretive rule to clarify what is considered a purchase money loan that is exempt from the regulation, and what types of money purchase (hybrid) loans would not be exempt. Which loan would be covered under the MLA and subject to all MLA provisions? A. Financing an extended warranty as part of a new car purchase B. Financing delivery and installation charges as part of the purchase of a refrigerator C. Financing of cash-out when the funds are being used for a purpose unrelated to the motor vehicle or personal property being purchased D. Financing of the negative equity on a trade-in when purchasing a new pick-up truck

The correct answer is c. A, B, and D are all examples of loans that remain exempt from the MLA even though extra charges are being financed.

A bank has provided disclosures to consumers about their rights and options under the E-SIGN Act. What else does the bank need to do to satisfy E-SIGN requirements? A. The bank must make computers available for all customers and customers must prove that they can use them B. The bank must mandate electronic disclosures for all customers and customers must agree to accept them C. The bank must receive consumers' consent and confirmation that they can receive or access the information electronically on their device D. Consumers must request electronic delivery and the bank must agree to send all disclosures using that method

The correct answer is c. A, B, and D are incorrect because the E-SIGN Act requires that in addition to providing the disclosures the banks must receive consumers' consent and confirmation (demonstrable consent) that they can receive or access the information electronically.

The correct answer is c. A, B, and D are incorrect because, providing the individual with the consumer report and notice allows them to dispute incorrect information in regard to an employment decision based on inaccurate consumer report data.

Mrs. Williams applies to rent an apartment from Better Living Apartments. She has been a customer of First National Bank for several years, so she lists the bank as a credit reference. Better Living sends the bank a credit inquiry letter, and the bank sends Better Living a list of Mrs. Williams's bank transactions. The report states that she has had several insufficient checks on her account over the last two months and that she has satisfactorily paid off a car loan. Better Living calls the bank and speaks to Consumer Loan Officer George Dillon. Mr. Dillon states that Mrs. Williams applied for a loan three months ago, and he denied the loan because of a slow-pay report from ABC Department Store that appeared on Mrs. Williams's credit report. Did the bank give Better Living a consumer report under the Fair Credit Reporting Act? A. No. Providing limited amounts of information from others will not cause the bank to be covered under the Fair Credit Reporting Act. B. Yes. By giving deposit-related information concerning returned checks, the bank created a consumer report. C. Yes. The bank gave credit information it received from another source. D. No. The ABC Department Store information was part of the bank's own experience, because it was used by the bank to make a credit decision.

The correct answer is c. Fair Credit Reporting Act, Section 603(d) and 15 USC CH 41 1681a Outline I A and B

First National Bank has denied a credit application from Mr. Johnson because the application scored too low on the bank's internal credit-scoring system. Mr. Johnson's credit report, received from a credit reporting agency, scored a four out of a possible 10. Other parts of Mr. Johnson's application received low scores also. Which statement best describes First National's responsibility to Mr. Johnson under the Fair Credit Reporting Act? A. Send an adverse action notice that states the reasons the credit was denied B. Send a notice that a credit report was used C. Send an adverse action notice that states that a credit report was used and gives the name and address of the credit reporting agency D. Send an adverse action notice that summarizes the information on the credit report

The correct answer is c. Fair Credit Reporting Act, Section 615(a) and 15 USC CH 41 1681m Outline III A and B When credit is denied based wholly or partly on information contained in a consumer report, the user of the report must advise the consumer of that fact and supply the name and address of the credit reporting agency. Under Regulation B, the adverse action notice must either give the reasons for the action or explain to the applicant that he or she has the right to request the reasons.

Which of the following is EXCLUDED from HMDA reporting? A. An application that was approved and then withdrawn by the applicant B. A loan secured by a houseboat C. An application for refinancing where the proceeds will be used to pay for college D. None. All are reportable

The correct answer is d. 12 CFR 1003.1(c); 1003.2; 1003.4(a)(3) and (38) Outline II(A) and (D) An institution reports all consumer loan purposes if the loan or application is dwelling secured. In addition, business purpose applications and loans are reported if they are for the purpose of home purchase, refinancing or home improvement.

In a review of a bank's home mortgage loan application register, which of the following must be included? A. Loans made or purchased in a fiduciary capacity B. Servicing rights purchased C. Interim construction loan applications D. Loans made, purchased and sold within the reporting period

The correct answer is d. 12 CFR 1003.3(c)(5) Outline II (D) (4), (12), and (14) All of the loans described are excluded from coverage except for loans made, purchased and sold within the reporting period.

First National is subject to HMDA reporting. On which of these loans does First National have to report the interest rate on its HMDA LAR? A. A loan to renovate a vacation property, secured by the property B. A loan to purchase a home for the borrower's son, secured by the property C. A home improvement loan secured by a principal dwelling D. All of the above

The correct answer is d. 12 CFR 1003.4 Outline III(B)(17)(25) As of 1/1/18, lenders must report the interest rate on HMDA-reportable loans. Both the rate spread and the interest rate are required.

Under HMDA rules, what is the threshold for reporting the interest rate spread for first lien mortgage loans? A. Equal to or greater than 1.5 percentage points B. Equal to or greater than 5 percentage points C. Equal to or greater than 7 percentage points and when the loan is subject to the Home Ownership and Equity Protection Act D. There is no threshold for reporting

The correct answer is d. 12 CFR 1003.4(a)(12) Outline III(B)(17)

First National Bank investigated Mr. Gilbert's allegation of a $500 EFT error. The bank provisionally credited the account during the investigation. The bank determined that no error was made and notified Mr. Gilbert on April 5 of the results of the investigation. On April 6, the bank debited Mr. Gilbert's account for $500, which before this debit had a balance of $700. On April 7, checks for $600 and $800 are presented for payment against the account, payable to third parties. On April 8, Mr. Gilbert comes into the bank to withdraw $100. What should First National do? A. Return both the $600 and the $800 checks and honor the cash withdrawal B. Pay both checks and honor the cash withdrawal C. Pay the $600 check and honor the cash withdrawal

The correct answer is d. 12 CFR 1005.11(d)(2) Outline II C(4) The bank must honor checks payable to third parties for five business days after the transmittal of the notice of the investigation. The bank does not have to honor checks that would not have been paid if the debit had not occurred. Therefore, the $800 check would not be paid. Because the $600 check would have been paid but for the debit of the $500, the bank must pay the $600. The $600 check the bank does have to pay now overdraws the account by $400. (Remember, the account has a real balance of $200.) The bank, therefore, does not have to honor a cash withdrawal—there are no funds in the account and only checks payable to third parties fall under this rule.

Alicia Perez telephoned the customer service department at First National Bank and requested to have $300 debited from her account and sent to her sister in Peru three days later. Which of the following alternatives best states the bank's responsibilities to Ms. Perez? A. Provide a written prepayment disclosure and receipt to Ms. Perez as soon as possible, but before the transfer is made B. Provide a written prepayment disclosure within one business day of the request; a receipt is not required C. Provide an oral prepayment disclosure at the time of the request D. Provide an oral prepayment disclosure at the time of the request and the receipt information on the next account statement

The correct answer is d. 12 CFR 1005.31(e)(2); 12 CFR 1005.31(g)(2) Outline II H 2(d) and H(6) When the entire transaction is conducted orally by telephone, a prepayment disclosure may be provided orally (but must be in the language in which the sender conducts the transaction). If the transaction is conducted solely by phone and the funds are debited from the sender's account at the institution, the receipt may be provided on the next periodic statement.

In which of the following cases would ABC Bank have to obtain an appraisal performed by a state-certified appraiser? A. On a $200,000 loan made by Mr. and Mrs. Littlefield to purchase their home, which will be secured by their home B. On a $75,000 loan to be secured by a two-story commercial office building C. On a $150,000 working capital loan fully secured by a bank certificate of deposit, on which the loan officer has also taken a lien on a vacant lot owned by the borrower D. On a $300,000 loan to Mr. Burch secured by his life estate in his home. The home was left to Mr. Burch on the death of his father. The father's will states that the home will belong to Mr. Burch during his life but will revert to Mr. Burch's son on his death.

The correct answer is d. 12 CFR 225.63(b), 12 CFR 34.43(b), 12 CFR 323.3(b), and 12 CFR 164.3(b) Outline I A and C An appraisal by a certified appraiser is required on loans over $1 million, on nonresidential loans over $250,000, and on complex residential loans over $250,000. In this case (d) is the correct answer because the title to the home owned by Mr. Burch is a life estate interest, which is atypical; therefore, the transaction is complex. Answers (a) and (b) are not correct because the loan amounts are below the regulatory limits for an appraisal by a certified appraiser. Answer (c) is not correct because if the loan is fully secured by a bank certificate of deposit, the loan officer has taken the real estate simply as an abundance of caution and, therefore, an appraisal is not required.

First National Bank received a credit application from Lewis Nelson for a home equity loan. Bank policy prohibits originating loans to applicants that are 60 days or more past due on other obligations. Mr. Nelson indicated that he has a $75,000 loan from the Overton Cancer Center. The bank called the cancer center to check the credit history and balance on the loan. The bank discovered that Mr. Nelson is four months past due on the loan. Based on this information, the bank denied the home equity credit application to Mr. Nelson. Which statement is correct? A. The bank's denial, based on the information, was wrong because the fact that he had a loan from the cancer center involves medical information about the consumer. B. The bank should not have contacted the cancer center at all because doing so involves medical information about the consumer. C. The bank should have had disclosed on its consumer application that medically related debts do not have to be listed. D. The bank acted correctly because it treated the applicant's medical debt just as it would any other debt.

The correct answer is d. 12 CFR 41.30(d)(1); 12 CFR 1022.30(d)(1) Outline VI E(2)(b) Using medical information in a manner that is no less favorable than it uses other forms of credit information is an exception to the general rule.

There are specific requirements for the Fair Housing Act poster. What is one requirement for the poster? A. It must be available for clients to view if they ask for Equal Housing information B. It must be posted at all entrances to the financial institution C. It must be displayed on the real estate loan officer's desk D. It must be displayed in the financial institution's lobby

The correct answer is d. A, B, and C are incorrect because the Fair Housing poster must be posted in the financial institution's lobby.

When must the bank determine an applicants military status to enjoy the safe harbor? A. After the loan has been made B. Before the bank begins collection actions against the borrower C. Midpoint of the loan based on the amortization schedule D. Between 30 days prior to application and the time the account is established

The correct answer is d. A, B, and C are incorrect. Creditors enjoy the safe harbor if they make a determination of military status any time between 30 days prior to application and the time the account is established. Safe harbor is also provided if the creditor verifies military status simultaneously with the initiation of the transaction or submission of an application by the consumer, or during the course of the credit's processing of that application for consumer.

First National has an account for Mary Jones, who has had several overdrafts in her account over the past few months. On February 15, she overdrew her account and had a negative balance, which lasted for 10 days. As of March 14, the number of negative days in the statement cycle was three; and as of April 14, the number of days was six. The last overdraft occurred on May 14, and the account was overdrawn for three days. Mary has not been overdrawn since May. First National has extended the holds placed on all deposits to her account. How long can the bank continue to subject her account to extended hold periods? A. Until May 14 B. Until October 14 C. Until July 14 D. Until April 14 of the next year

correct answer is b. 12 CFR 229.13(d) Regulation CC Outline III E(4) - The bank can apply the extended hold because the depositor has been overdrawn for at least six days during the preceding six months. The six days is a running total. Basically, from any day in the year the bank should count back six months to determine if the number of overdrafts within that time period equals six or more. In this situation the six months begins to run from the April 14 date (the last date as of which the account has actually been overdrawn for six days). If Mary's account has no more overdrafts, by October 14 it will no longer meet the criterion of having been overdrawn for six days during the previous six months—so the hold will have to be lifted.

ABC Bank failed with the following accounts for Fred Jones on its books: • A certificate of deposit in the name of Fred Jones with a principal balance of $250,000 and accrued interest of $6,250 • An account for Fred Jones, for which Mr. Jones has now provided documentation showing that he opened the account as a payable-on-death account for his son; the account has a balance of $1.25 million • An IRA for the benefit of Fred Jones with a balance of $250,000 • An account styled "Fred Jones, trustee for Nancy Jones and Roger Wilson" with a balance of $200,000; Nancy is Fred's daughter, Roger is Fred's brother If the SMDIA is $250,000, how much of Fred's money is insured? A. $950,000 B. $750,000 C. $700,000 D. $500,000

correct answer is c. 12 CFR 330.6, 330.9, and 330.10 Outline III A, B, and C Fred's certificate of deposit is a single ownership account and is insured for the full principal balance of $250,000. The interest is not insurable because it would put the account over the $250,000 limit. The account that Fred now claims was a revocable trust would be considered a single ownership account and would be aggregated with the certificate of deposit for purposes of determining the application of deposit insurance. The FDIC will rely only on the bank records in this case. The intention to make the account a revocable trust must be reflected on the records of the account. The IRA is fully insured. The revocable trust account for Fred's daughter and brother is fully insured because both beneficiaries are eligible to be covered.

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