CAC Risk Analysis 5

Question 1

Under FFIEC uniform retail credit guidance, closed-end retail loans such as auto loans are generally charged off by how many days past due?

Accepted Answer

120 days

Answer

FFIEC guidance generally calls for closed-end retail loans to be charged off at 120 days delinquent.

Question 2

Under the Equal Credit Opportunity Act, which factor may a lender NOT use to deny credit?

Accepted Answer

The fact that income comes from public assistance

Answer

ECOA prohibits discrimination because all or part of an applicant's income derives from public assistance.

Question 3

When an auto credit application is denied based on a credit report, what must the lender provide?

Accepted Answer

An adverse action notice

Answer

ECOA and FCRA require an adverse action notice stating the reasons or the right to obtain them.

Question 4

Under the CECL accounting standard, how are allowances for credit losses on auto loans measured?

Accepted Answer

Lifetime expected losses recognized from origination

Answer

CECL requires estimating expected losses over the full contractual life when the loan is booked.

Question 5

Which collateral profile generally increases loss severity if the borrower defaults?

Accepted Answer

An older, high-mileage vehicle that depreciates quickly

Answer

Rapidly depreciating collateral yields lower auction proceeds and larger deficiencies.

CAC - Certified Acceptance Corporation Professional Practice Test