NCCO - EXAM 3 QUESTIONS AND 100%
CORRECT ANSWERS.
What types of credit products are covered under Regulation Z? - ANS Loans secured by real
property,
loans secured by personal property used as a member's principal dwelling or,
Private education loans.
What types of credit products are not covered under Regulation Z? - ANS Business loans, for
commercial or agricultural purposes
Loan to non-natural persons
Credit over $69,500 (limit is adjusted annually)
What is open ended credit? What is close ended credit? - ANS Open ended credit:
Repeated transactions
Finance charge is imposed on outstanding unpaid balance
Credit replenished as balance is repaid
Close ended credit:
all other credit plans
What is a dwelling? - ANS A residential structure that contains 1-4 units, whether or not that
structure is attached to real property. Includes individual condominium units, cooperative units,
mobile home and trailer, if it is used as a residence.
Are there differences in account opening disclosures for HELOCs and other open-end credit?
When must the disclosure be provided? - ANS For HELOCs, Reg Z requires:
-Application disclosures
- Account opening disclosures
- Periodic statements
*** CFPB Booklet is required to be given to the member
Disclosures must be provided to member prior to the first transaction.
What disclosures are required when advertising a promotional APR? - ANS If promotional rate
is related to opening of a new account, the CU must refer to the rate as "introductory", must be
listed immediately next to each listing of the promotional rate.
Disclosures should also define in a prominent location (close to stated APR) when the
promotional rate will end and the APR that will apply after the end of the promotional period.
What are the change-in-terms requirements for open-ended credit? Are the rules the same for all
open ended products? If not, what are the differences? - ANS Must provide a 45-day notice of
, change in terms whenever there is a change to a term required to be in the account opening
disclosures.
For HELOC's, changes to terms requires the CU to issue a notice 15 days prior to the effective
date of the change. This is an example of a unilateral term change.
What are the periodic statement requirements for the different open-end credit products? What
are the timing requirements for providing each statement? - ANS Must group interest and fee
charges separately from other transactions and fee and interest charges must be totaled for the
period and year-to-date in a tabular format.
Credit Card statements must have late payment warnings, minimum payment warning and
repayment disclosure examples.
-Non-credit card with no grace period: 14 days prior to due date
-Non-credit card with a grace period: 21 days prior to end of grace period
- Credit card: 21 days prior to due date
When are additional disclosures required for open-end credit advertising? Are there any
exceptions? - ANS - A trigger term is mentioned: any minimum, fixed, transaction, activity or
similar charge that is a finance charge that could be imposed, the APR and if the plan provides
for variable APR, any membership or participation fee could be imposed.
- Promotional rate: If promotional rate is related to opening of a new account, the CU must refer
to the rate as "introductory", must be listed immediately next to each listing of the promotional
rate. Disclosures should also define in a prominent location (close to stated APR) when the
promotional rate will end and the APR that will apply after the end of the promotional period.
Exceptions include: television and radio advertisements, APR as well as a toll-free number can
be provided to members to call for additional disclosure information.
What are the special rules applicable to HELOCs? - ANS Yes, there are limitation on changing
terms, terminating plans and demanding repayment.
If there are any unilateral term changes, a 15 days advance notice is required.
Do all open-end credit products have application disclosure requirements? If not, which ones do?
- ANS No, it does not apply to credit card accounts, personal lines of credit, overdraft lines of
credit as well as other, not-home secured open-end credit accounts.
What are the special advertising rules applicable to HELOCs? - ANS Disclosures required when
there are:
Trigger terms
Discount of premium intital rates
Balloon payments
CORRECT ANSWERS.
What types of credit products are covered under Regulation Z? - ANS Loans secured by real
property,
loans secured by personal property used as a member's principal dwelling or,
Private education loans.
What types of credit products are not covered under Regulation Z? - ANS Business loans, for
commercial or agricultural purposes
Loan to non-natural persons
Credit over $69,500 (limit is adjusted annually)
What is open ended credit? What is close ended credit? - ANS Open ended credit:
Repeated transactions
Finance charge is imposed on outstanding unpaid balance
Credit replenished as balance is repaid
Close ended credit:
all other credit plans
What is a dwelling? - ANS A residential structure that contains 1-4 units, whether or not that
structure is attached to real property. Includes individual condominium units, cooperative units,
mobile home and trailer, if it is used as a residence.
Are there differences in account opening disclosures for HELOCs and other open-end credit?
When must the disclosure be provided? - ANS For HELOCs, Reg Z requires:
-Application disclosures
- Account opening disclosures
- Periodic statements
*** CFPB Booklet is required to be given to the member
Disclosures must be provided to member prior to the first transaction.
What disclosures are required when advertising a promotional APR? - ANS If promotional rate
is related to opening of a new account, the CU must refer to the rate as "introductory", must be
listed immediately next to each listing of the promotional rate.
Disclosures should also define in a prominent location (close to stated APR) when the
promotional rate will end and the APR that will apply after the end of the promotional period.
What are the change-in-terms requirements for open-ended credit? Are the rules the same for all
open ended products? If not, what are the differences? - ANS Must provide a 45-day notice of
, change in terms whenever there is a change to a term required to be in the account opening
disclosures.
For HELOC's, changes to terms requires the CU to issue a notice 15 days prior to the effective
date of the change. This is an example of a unilateral term change.
What are the periodic statement requirements for the different open-end credit products? What
are the timing requirements for providing each statement? - ANS Must group interest and fee
charges separately from other transactions and fee and interest charges must be totaled for the
period and year-to-date in a tabular format.
Credit Card statements must have late payment warnings, minimum payment warning and
repayment disclosure examples.
-Non-credit card with no grace period: 14 days prior to due date
-Non-credit card with a grace period: 21 days prior to end of grace period
- Credit card: 21 days prior to due date
When are additional disclosures required for open-end credit advertising? Are there any
exceptions? - ANS - A trigger term is mentioned: any minimum, fixed, transaction, activity or
similar charge that is a finance charge that could be imposed, the APR and if the plan provides
for variable APR, any membership or participation fee could be imposed.
- Promotional rate: If promotional rate is related to opening of a new account, the CU must refer
to the rate as "introductory", must be listed immediately next to each listing of the promotional
rate. Disclosures should also define in a prominent location (close to stated APR) when the
promotional rate will end and the APR that will apply after the end of the promotional period.
Exceptions include: television and radio advertisements, APR as well as a toll-free number can
be provided to members to call for additional disclosure information.
What are the special rules applicable to HELOCs? - ANS Yes, there are limitation on changing
terms, terminating plans and demanding repayment.
If there are any unilateral term changes, a 15 days advance notice is required.
Do all open-end credit products have application disclosure requirements? If not, which ones do?
- ANS No, it does not apply to credit card accounts, personal lines of credit, overdraft lines of
credit as well as other, not-home secured open-end credit accounts.
What are the special advertising rules applicable to HELOCs? - ANS Disclosures required when
there are:
Trigger terms
Discount of premium intital rates
Balloon payments
