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Banking CRCM Exam
CERTIFIED REGULATORY COMPLIANCE MANAGER (CRCM) (Page 7 )

Updated On: 12-Jan-2026
Page 7 of 276
PDF with 463 Questions

Which of the following are recommended practices In Avoiding Predatory and Abusive Lending Practices in Brokered and Purchased Loans--AL-2003-3?

  1. Have written agreements with third-party brokers that specifically and clearly address the rights and responsibilities of each party. Written agreements should
    1. Ensure that no inappropriate compensation exists
    2. Provide for indemnification to the bank
    3. Enable banks to exit the arrangement through a termination procedure
    4. Provide for the bank's and the OCC's ability to access all records of the third party and to audit the third party's operations
  2. Verify that brokers and originators have established policies to ensure that loans will comply with all applicable laws
  3. Establish an effective management information system to monitor the performance of third-party brokers and originators
  4. All of the above

Answer(s): D



Examples of unfair practices mentioned in guidelines against Predatory and Abusive Lending includes loan flipping and loan equity stripping. It is said that:

  1. Loan flipping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden
  2. Equity stripping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home
  3. Loan flipping is the practice of making loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home
  4. Equity stripping may be unfair because it increases the chances of foreclosure by decreasing home equity and increasing debt burden

Answer(s): A,B



The purpose of advisory letter in Avoiding Predatory and Abusive Lending Practices in Brokered and Purchased Loans- AL-2003-3 is to:

  1. Adopt sound credit underwriting policies
  2. Alert national banks to the risks they take if they make loans through brokers or purchase loans that contain or reflect abusive or predatory terms or practices
  3. Adopt policies that address the circumstances under which the bank would make loans that have features associated with abusive lending practices
  4. Make loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home

Answer(s): B



Predatory lending practices can adversely affect:

  1. A bank's CRA rating
  2. Equity shipping
  3. Loan quality control reviews
  4. Truth in Lending Act

Answer(s): A



Guidelines for National Banks to Guard against Predatory and Abusive Lending Practices--AL-2003-2 says that refusing to purchase the following types of loans can reduce the possibility of purchasing abusive mortgage loans EXCEPT:

  1. Loans in which the lender has not adequately determined the borrower's ability to repay the debt
  2. Loans subject to the Home Ownership and Equity Protection Act (HOEPA)
  3. Loans with points and fees in excess of 5 percent of the loan amount, except in cases where the higher amount was to prevent the loan from being unprofitable
  4. Loans in which a prepaid multiple-premium credit insurance policy was included in the amount financed

Answer(s): D



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