CRB Financial Regulations & Compliance 5 — Questions and Answers
Question 1: Which law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a mortgage application?
- RESPA
- TILA
- TRID (TILA-RESPA Integrated Disclosure) (Correct answer)
- HMDA
Correct answer: TRID (TILA-RESPA Integrated Disclosure)
TRID, which integrated TILA and RESPA disclosures, requires lenders to provide a Loan Estimate within three business days of receiving a completed mortgage application.
Question 2: Under the Fair Credit Reporting Act (FCRA), how long may most negative information remain on a consumer's credit report?
- 3 years
- 5 years
- 7 years (Correct answer)
- 10 years
Correct answer: 7 years
The FCRA generally limits most negative credit information, such as late payments and collections, to seven years on a consumer credit report.
Question 3: What does 'Regulation D' historically govern in retail banking?
- Minimum reserve requirements and limits on certain savings account withdrawals (Correct answer)
- Availability of deposited funds
- Electronic fund transfer consumer protections
- Mortgage disclosure requirements
Correct answer: Minimum reserve requirements and limits on certain savings account withdrawals
Regulation D historically established reserve requirements and limited certain savings and money market account withdrawals to six per month, though the withdrawal limit was suspended in 2020.
Question 4: A bank discovers that an employee has been falsifying loan applications. Under BSA, what must the bank do?
- Terminate the employee and internally document the incident
- File a SAR with FinCEN within 30 calendar days of detection (Correct answer)
- Report the incident to the customer whose loan was affected
- Notify the state banking regulator only
Correct answer: File a SAR with FinCEN within 30 calendar days of detection
Banks must file a SAR within 30 calendar days (or 60 days if no suspect is identified) when they detect known or suspected employee fraud.
Question 5: Which of the following best describes 'predatory lending'?
- Offering lower interest rates to attract new customers
- Imposing unfair or abusive loan terms on borrowers, often targeting vulnerable populations (Correct answer)
- Requiring collateral for large personal loans
- Charging standard origination fees on all mortgage products
Correct answer: Imposing unfair or abusive loan terms on borrowers, often targeting vulnerable populations
Predatory lending involves deceptive, coercive, or abusive loan terms—such as excessive fees or unsuitable products—often targeting elderly, low-income, or minority borrowers.
Question 6: Under the Military Lending Act (MLA), what is the maximum Military Annual Percentage Rate (MAPR) that can be charged to covered service members on consumer credit?
- 18%
- 21%
- 28%
- 36% (Correct answer)
Correct answer: 36%
The MLA caps the Military Annual Percentage Rate at 36% for consumer credit extended to active-duty service members and their dependents.
Question 7: What is the key difference between a 'freeze' and a 'hold' placed on a bank account?
- A freeze prevents all account activity while a hold restricts only deposit availability (Correct answer)
- A freeze and a hold are legally identical terms
- A hold is imposed by regulators while a freeze is the bank's decision
- A hold applies only to checks while a freeze applies only to electronic transfers
Correct answer: A freeze prevents all account activity while a hold restricts only deposit availability
An account freeze (often due to legal order or suspected fraud) blocks all transactions, whereas a hold typically limits access to specific deposited funds pending verification.
CRB Financial Regulations & Compliance 5
Which law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a mortgage application?