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Current Industry Issues Flashcards

7 cards from real CMB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A lender uses a complex machine-learning model to deny credit applications. According to CFPB guidance, what must the adverse action notice provide?

    Answer: Specific and accurate principal reasons for the denial, even if the model is complex

    CFPB Circular 2022-03 and 2023-03 confirm ECOA/Regulation B require specific principal reasons regardless of the technology used.

  2. Which federal rule finalized in 2024 requires mortgage originators and secondary market issuers to adopt quality control standards for automated valuation models (AVMs)?

    Answer: The interagency AVM Quality Control Standards rule

    Six agencies jointly finalized AVM quality control standards covering confidence, data manipulation, conflicts of interest, random testing, and nondiscrimination.

  3. Following the 2024 NAR settlement, what is a key change affecting homebuyers using a buyer's agent?

    Answer: Buyers generally must sign a written agreement with their agent before touring homes

    The settlement requires written buyer agreements and bars offers of buyer-broker compensation on the MLS.

  4. Why have trigger leads been a major industry concern, prompting federal legislation in 2025?

    Answer: Credit bureaus sold notices of a consumer's mortgage inquiry to competing lenders who then flooded the consumer with solicitations

    The Homebuyers Privacy Protection Act restricts the sale of mortgage-inquiry trigger leads to limited circumstances.

  5. Under the amended FTC Safeguards Rule, a nonbank mortgage lender must notify the FTC of a security event involving unencrypted information of at least how many consumers?

    Answer: 500

    The rule requires notice to the FTC within 30 days of discovering a notification event affecting 500 or more consumers.

  6. What is the primary risk that the CFPB and FHFA have highlighted regarding appraisal bias?

    Answer: Systematic undervaluation of homes in minority neighborhoods

    The interagency PAVE initiative targeted racial and ethnic bias that leads to undervaluation in minority communities.

  7. A lender relies on a third-party AI underwriting vendor. Who bears fair lending responsibility for discriminatory outcomes?

    Answer: The lender remains responsible for compliance

    Regulators hold lenders accountable for third-party tools, including disparate impact from proxy variables.