Question 1

Underwriting standards in Subprime Mortgage Lending include:

Options :

A : The borrower’s debt-to-income ratio should include the borrower’s total yearly housing-related payments as a percentage of gross monthly income

B : Institutions should have a clear policy governing the use of risk-layering features, such as reduced documentation loans or simultaneous second lien mortgages

C : Stated income and reduced documentation loans to subprime borrowers should be made only if there are clear, documented mitigating factors

D : Mitigating factors should be present when risk layering features are combined in order to support the underwriting decision and the borrower’s repayment capacity

Answer: A

Question 2

How long after discovery does a bank have to report any lost or missing securities when criminal activity is suspected?

Options :

A : 90 calendar days

B : 1 business day

C : Never. Law enforcement must report

D : 10 business days

Answer: B

Question 3

First National Bank is a wholly owned subsidiary of Bank Holding Company, Inc.Which of the following companies is NOT an affiliate of First National Bank?

Options :

A : A company that owns 60 percent of Bank Holding Company, Inc.

B : A company of which First National owns 100 percent of the stock, set up solely to hold the title to the First National Bank building

C : A company established to sell securities and that is 100 percent owned by Bank Holding Company, Inc.

D : Another bank that is owned by Bank Holding Company, Inc.

Answer: B

Question 4

Which of the following is NOT a requirement of CRA?

Options :

A :

To delineate the bank’s assessment area(s)

B : To collect loan data

C : To approve the bank’s CRA statement at an annual board meeting

D : To report small business loan data

Answer: C

Question 5

Which of the following is an accurate statement according to the requirements of the customer identification program regulations?

Options :

A : A bank must always require documentary verification of a customer’s identification

B : A bank may waive any part of the CIP requirements if senior management approves the waiver and there is a good cause

C : A physical address or a post office box is acceptable for any new customer

D : The bank’s CIP program must enable it to form a reasonable belief about the identity of the person

Answer: D

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