CRCM FINAL EXAM 2022| 407 QUESTIONS|
WITH COMPLETE SOLUTION( 72 PAGES)
During a recent compliance examination, regulators cited the bank for violations of various
marketing regulations. How should the compliance professional FIRST respond? Correct
Answer: Review the marketing materials and applicable regulations to verify the finding.
When a bank is cited for a regulatory violation, the compliance professional must first determine
whether the bank should agree with it. This is done by reviewing the pertinent regulations and
affected materials. If the citation is supported by the regulations, then the compliance manager
should discuss it with the marketing manager. Solutions may include training marketing
personnel or establishing new policies for reviews.
During a recent compliance examination, regulatory examiners found that the bank was not
conducting flood hazard area determinations before closing on construction loans. The
compliance professional has reviewed the files and agreed with the examiners' finding. What
should be done FIRST? Correct Answer: Review the bank's flood policies and procedures to
determine where the compliance failure occurred.
If the compliance professional agrees with the regulators on a finding, the root cause of the error
must be determined by consulting policies and procedures. There is no benefit to conducting a
risk assessment because the issue is known. After determining the cause, then the extent of the
problem must be determined. Only after gathering this pertinent information can the compliance
professional write an analysis for management explaining the situation
Legislation was recently enacted to reform consumer real estate protection laws, and the bank
will now have to change the way it documents, discloses, and advertises real estate loans, an
integral product line at your bank. What should the compliance professional do FIRST to
implement the new law within the bank? Correct Answer: Form a task force of the business unit
managers whose departments will be affected by the law to collectively form an action plan.
When implementing new rules, it is beneficial to start with a task force of affected managers that
can make decisions about how to implement the new rule. The other actions would eventually
become necessary, but it would be timelier to write the new policy and then develop training
only after the compliance professional has a clearer idea of needed actions. Talking to the bank
president about resources would not be helpful to implementing new legislation, unless it can be
shown as necessary to complying as the business units have chosen.
The federal banking agencies have proposed an amendment to Regulation Z that would require a
new early disclosure statement for loans secured by the borrower's principal dwelling. After
reading the proposed change, what should the compliance professional do FIRST? Correct
Answer: Prepare a summary document that outlines the effects the proposed rule would have on
the bank's operations.
This proposed change is important to the bank. The compliance professional should first analyze
its effect and provide that summary to the affected business units, and then establish a task force
to study the proposal. Contacting the vendor may be part of the risk considered by the task force.
,Training bank staff regarding the new rule is not appropriate until the rule is final. Proposed rules
sometimes do not become final or may change with the final ruling.
A bank has a large mortgage department as well as a high HMDA error rate. An expensive
software program could automate the process, but the business unit manager does not want to
purchase the software because of its expense. Though it is not as efficient, the manager prefers to
make some improvements to the manual process, add some more robust monitoring procedures,
and opt not to purchase the software. What should the compliance professional do? Correct
Answer: Document the fact that the level of risk present with manual systems is acceptable to
the mortgage department business unit.
The job of the compliance officer is to assess the risks and inform management of those risks.
The business unit can decide what level of risk to accept. If the high level of HMDA errors
continues, even with the improved procedures, the problem can be escalated and brought to
senior management's attention.
A compliance professional is a member of the task force studying how the bank can reduce
customer complaints about holding deposits. One proposed solution involves purchasing an
expensive system that will reduce the number of holds placed by evaluating the customer's
history and relationship with the bank. Which of the following roles is MOST important for the
compliance professional on the task force? Correct Answer: Validating the system to ensure it
complies with regulatory restrictions.
The compliance professional's role on a task force is to provide knowledge about compliance
risk, such as whether the system is in compliance with relevant laws and regulations. The
training, parameters, and cost-benefit analysis are more operational in nature.
A bank's president would like to begin offering a new home equity line of credit product within
two weeks. In all cases the borrower's principal dwelling will secure the loan. The president has
already launched a planned advertising campaign for the bank's major service markets. What
should the compliance professional do FIRST? Correct Answer: Perform a risk assessment to
determine the bank's level of risk in offering this new product.
Before going forward, the compliance professional needs to determine what level and types of
risk are involved. It is possible the new product is similar to an existing product, and the new
offering will not increase the bank's risk. After determining the risk, the compliance professional
will know better how to proceed
When developing a training plan for commercial lenders, which of the following regulations is
least important to include? Correct Answer: Truth in Lending Act, CFPB Regulation Z
The compliance professional should risk manage the training program. A commercial group
needs to know the rules for fair lending, HMDA, and insider lending. Regulation Z is more
relevant for the consumer lending audience.
Under Regulation M, what is a "consumer lease"?
12 CFR 1013 Correct Answer: A consumer lease for the annually adjusted threshold amount or
less for the use of personal property
,Roberta Milton's car lease with First National Bank reached its termination on August 1. Roberta
and the bank agreed to extend the lease on a month-to-month basis without charging her a fee for
doing so. What disclosure responsibilities does the bank have now? Correct Answer: None, until
after six months of the month-to-month lease
A bank does not know all of the specific information to be disclosed on the lease at the time of
the consummation. What may the bank do after attempting to obtain the information? Correct
Answer: Estimate the amounts and note that the information is estimated
When must disclosures on consumer leasing transactions subject to Regulation M be made?
Correct Answer: Before the consummation of the lease
First National's consumer leasing department placed an ad in the local paper that pictured a car
with the caption, "Sign a lease with us and pay only $275 per month." What other information
must this ad have? Correct Answer: The total amount due at consummation or delivery, the
number of payments required, and any required security deposit
Any of the following triggering terms will require full disclosures in the advertisement: the
amount of any payment, the number of required payments, or a statement that no down payment
or other payment is required at consummation. The information that is required to be disclosed
includes the payment information, the total amount due at consummation, and any required
security deposit. The bank must also disclose any extra charges required at the end of the lease
term if the lessee's liability is based on the difference between the residual value and the realized
value of the leased property.
What insurance disclosures are required in the lease disclosure statement? Correct Answer: The
types and amounts of coverage provided by the lessor and the cost to the lessee.
If provided by the lessor, the disclosure must include the types, amounts, and cost to the lessee.
If not provided by the lessor, the type and amount must be disclosed.
Records regarding compliance with Regulation M must be kept for how long? Correct Answer:
Two years after the disclosures are made
With regard to standards for wear and use of leased property, which of the following statements
is true? Correct Answer: A lessor must provide a notice of wear and use standards on motor
vehicle leases.
Milton Edwards leased an automobile from First National Bank. The lease contained a provision
whereby Milton would be liable for the automobile at the end of the lease based on its fair
market value. At the end of the lease, the bank notified Milton that the value of the automobile,
based on industry publications, was $10,500 and required him to pay that amount to obtain
ownership of the property. Milton objected and requested that the car be individually appraised.
What must the bank do? Correct Answer: Allow Milton to hire an independent appraiser to
appraise the automobile (both parties agree to be bound by the appraisal)
, The initial disclosure requires that certain disclosures relating to the termination of a lease be
given to the consumer. Which of these disclosures is NOT required? Correct Answer: Whether
the lease may be extended at the option of the lessee
Which of the following actions is NOT an adverse action? Correct Answer: Refusal to grant
credit on the grounds that the lender does not offer the type of credit requested.
ACME Bank is a state nonmember bank with all of its offices in one state. However, it also has
an Internet Web site where it advertises consumer credit and accepts applications from a five-
state regional area. Two of the states are community property states. The other three are not.
What is the best explanation for what ACME bank's management should do to comply with the
FDIC ECOA spousal signature guidance? Correct Answer: ACME must become familiar with
the laws of each of the five states and ask for spouse signatures only when appropriate under the
law.
For what do ECOA and Regulation B extend coverage? Correct Answer: All types of credit.
The prohibition against discrimination in the Equal Credit Opportunity Act and Regulation B
applies to all types of credit regardless of the borrower, amount, or purpose. Certain adverse
action notification requirements apply only to credit to consumers for personal, family, and
household purposes and to credit extended to businesses that have $1 million or less in gross
revenues.
Which of the following statements regarding applications is correct? Correct Answer: Creditors
may accept oral applications.
A creditor may set its own procedures for accepting applications. If the creditor makes a policy
that no oral applications will be accepted and, in actual practice, accepts no oral applications, the
creditor is in compliance with 1002.2(f) of Regulation B.
When helping a loan officer determine whether the bank must give a written adverse action
notice to a business loan applicant, what should the compliance officer consider? Correct
Answer: Gross revenue for the preceding fiscal year
Gross revenue is the measure for whether a notice must be given to a business applicant.
Which of the following describes the record retention requirements under Regulation B for a
credit application from a business with annual gross revenues in excess of $1,000,000? Correct
Answer: The bank must retain records for 12 months if a written statement of adverse action is
requested within 60 days after notifying the applicant of the action taken.
This shorter record retention is required only for business purpose applicants.
What may a creditor do in response to an application for credit from a business with gross
revenues of $1 million or less? Correct Answer: Give a disclosure of the applicant's right to
WITH COMPLETE SOLUTION( 72 PAGES)
During a recent compliance examination, regulators cited the bank for violations of various
marketing regulations. How should the compliance professional FIRST respond? Correct
Answer: Review the marketing materials and applicable regulations to verify the finding.
When a bank is cited for a regulatory violation, the compliance professional must first determine
whether the bank should agree with it. This is done by reviewing the pertinent regulations and
affected materials. If the citation is supported by the regulations, then the compliance manager
should discuss it with the marketing manager. Solutions may include training marketing
personnel or establishing new policies for reviews.
During a recent compliance examination, regulatory examiners found that the bank was not
conducting flood hazard area determinations before closing on construction loans. The
compliance professional has reviewed the files and agreed with the examiners' finding. What
should be done FIRST? Correct Answer: Review the bank's flood policies and procedures to
determine where the compliance failure occurred.
If the compliance professional agrees with the regulators on a finding, the root cause of the error
must be determined by consulting policies and procedures. There is no benefit to conducting a
risk assessment because the issue is known. After determining the cause, then the extent of the
problem must be determined. Only after gathering this pertinent information can the compliance
professional write an analysis for management explaining the situation
Legislation was recently enacted to reform consumer real estate protection laws, and the bank
will now have to change the way it documents, discloses, and advertises real estate loans, an
integral product line at your bank. What should the compliance professional do FIRST to
implement the new law within the bank? Correct Answer: Form a task force of the business unit
managers whose departments will be affected by the law to collectively form an action plan.
When implementing new rules, it is beneficial to start with a task force of affected managers that
can make decisions about how to implement the new rule. The other actions would eventually
become necessary, but it would be timelier to write the new policy and then develop training
only after the compliance professional has a clearer idea of needed actions. Talking to the bank
president about resources would not be helpful to implementing new legislation, unless it can be
shown as necessary to complying as the business units have chosen.
The federal banking agencies have proposed an amendment to Regulation Z that would require a
new early disclosure statement for loans secured by the borrower's principal dwelling. After
reading the proposed change, what should the compliance professional do FIRST? Correct
Answer: Prepare a summary document that outlines the effects the proposed rule would have on
the bank's operations.
This proposed change is important to the bank. The compliance professional should first analyze
its effect and provide that summary to the affected business units, and then establish a task force
to study the proposal. Contacting the vendor may be part of the risk considered by the task force.
,Training bank staff regarding the new rule is not appropriate until the rule is final. Proposed rules
sometimes do not become final or may change with the final ruling.
A bank has a large mortgage department as well as a high HMDA error rate. An expensive
software program could automate the process, but the business unit manager does not want to
purchase the software because of its expense. Though it is not as efficient, the manager prefers to
make some improvements to the manual process, add some more robust monitoring procedures,
and opt not to purchase the software. What should the compliance professional do? Correct
Answer: Document the fact that the level of risk present with manual systems is acceptable to
the mortgage department business unit.
The job of the compliance officer is to assess the risks and inform management of those risks.
The business unit can decide what level of risk to accept. If the high level of HMDA errors
continues, even with the improved procedures, the problem can be escalated and brought to
senior management's attention.
A compliance professional is a member of the task force studying how the bank can reduce
customer complaints about holding deposits. One proposed solution involves purchasing an
expensive system that will reduce the number of holds placed by evaluating the customer's
history and relationship with the bank. Which of the following roles is MOST important for the
compliance professional on the task force? Correct Answer: Validating the system to ensure it
complies with regulatory restrictions.
The compliance professional's role on a task force is to provide knowledge about compliance
risk, such as whether the system is in compliance with relevant laws and regulations. The
training, parameters, and cost-benefit analysis are more operational in nature.
A bank's president would like to begin offering a new home equity line of credit product within
two weeks. In all cases the borrower's principal dwelling will secure the loan. The president has
already launched a planned advertising campaign for the bank's major service markets. What
should the compliance professional do FIRST? Correct Answer: Perform a risk assessment to
determine the bank's level of risk in offering this new product.
Before going forward, the compliance professional needs to determine what level and types of
risk are involved. It is possible the new product is similar to an existing product, and the new
offering will not increase the bank's risk. After determining the risk, the compliance professional
will know better how to proceed
When developing a training plan for commercial lenders, which of the following regulations is
least important to include? Correct Answer: Truth in Lending Act, CFPB Regulation Z
The compliance professional should risk manage the training program. A commercial group
needs to know the rules for fair lending, HMDA, and insider lending. Regulation Z is more
relevant for the consumer lending audience.
Under Regulation M, what is a "consumer lease"?
12 CFR 1013 Correct Answer: A consumer lease for the annually adjusted threshold amount or
less for the use of personal property
,Roberta Milton's car lease with First National Bank reached its termination on August 1. Roberta
and the bank agreed to extend the lease on a month-to-month basis without charging her a fee for
doing so. What disclosure responsibilities does the bank have now? Correct Answer: None, until
after six months of the month-to-month lease
A bank does not know all of the specific information to be disclosed on the lease at the time of
the consummation. What may the bank do after attempting to obtain the information? Correct
Answer: Estimate the amounts and note that the information is estimated
When must disclosures on consumer leasing transactions subject to Regulation M be made?
Correct Answer: Before the consummation of the lease
First National's consumer leasing department placed an ad in the local paper that pictured a car
with the caption, "Sign a lease with us and pay only $275 per month." What other information
must this ad have? Correct Answer: The total amount due at consummation or delivery, the
number of payments required, and any required security deposit
Any of the following triggering terms will require full disclosures in the advertisement: the
amount of any payment, the number of required payments, or a statement that no down payment
or other payment is required at consummation. The information that is required to be disclosed
includes the payment information, the total amount due at consummation, and any required
security deposit. The bank must also disclose any extra charges required at the end of the lease
term if the lessee's liability is based on the difference between the residual value and the realized
value of the leased property.
What insurance disclosures are required in the lease disclosure statement? Correct Answer: The
types and amounts of coverage provided by the lessor and the cost to the lessee.
If provided by the lessor, the disclosure must include the types, amounts, and cost to the lessee.
If not provided by the lessor, the type and amount must be disclosed.
Records regarding compliance with Regulation M must be kept for how long? Correct Answer:
Two years after the disclosures are made
With regard to standards for wear and use of leased property, which of the following statements
is true? Correct Answer: A lessor must provide a notice of wear and use standards on motor
vehicle leases.
Milton Edwards leased an automobile from First National Bank. The lease contained a provision
whereby Milton would be liable for the automobile at the end of the lease based on its fair
market value. At the end of the lease, the bank notified Milton that the value of the automobile,
based on industry publications, was $10,500 and required him to pay that amount to obtain
ownership of the property. Milton objected and requested that the car be individually appraised.
What must the bank do? Correct Answer: Allow Milton to hire an independent appraiser to
appraise the automobile (both parties agree to be bound by the appraisal)
, The initial disclosure requires that certain disclosures relating to the termination of a lease be
given to the consumer. Which of these disclosures is NOT required? Correct Answer: Whether
the lease may be extended at the option of the lessee
Which of the following actions is NOT an adverse action? Correct Answer: Refusal to grant
credit on the grounds that the lender does not offer the type of credit requested.
ACME Bank is a state nonmember bank with all of its offices in one state. However, it also has
an Internet Web site where it advertises consumer credit and accepts applications from a five-
state regional area. Two of the states are community property states. The other three are not.
What is the best explanation for what ACME bank's management should do to comply with the
FDIC ECOA spousal signature guidance? Correct Answer: ACME must become familiar with
the laws of each of the five states and ask for spouse signatures only when appropriate under the
law.
For what do ECOA and Regulation B extend coverage? Correct Answer: All types of credit.
The prohibition against discrimination in the Equal Credit Opportunity Act and Regulation B
applies to all types of credit regardless of the borrower, amount, or purpose. Certain adverse
action notification requirements apply only to credit to consumers for personal, family, and
household purposes and to credit extended to businesses that have $1 million or less in gross
revenues.
Which of the following statements regarding applications is correct? Correct Answer: Creditors
may accept oral applications.
A creditor may set its own procedures for accepting applications. If the creditor makes a policy
that no oral applications will be accepted and, in actual practice, accepts no oral applications, the
creditor is in compliance with 1002.2(f) of Regulation B.
When helping a loan officer determine whether the bank must give a written adverse action
notice to a business loan applicant, what should the compliance officer consider? Correct
Answer: Gross revenue for the preceding fiscal year
Gross revenue is the measure for whether a notice must be given to a business applicant.
Which of the following describes the record retention requirements under Regulation B for a
credit application from a business with annual gross revenues in excess of $1,000,000? Correct
Answer: The bank must retain records for 12 months if a written statement of adverse action is
requested within 60 days after notifying the applicant of the action taken.
This shorter record retention is required only for business purpose applicants.
What may a creditor do in response to an application for credit from a business with gross
revenues of $1 million or less? Correct Answer: Give a disclosure of the applicant's right to
