CRB Lending & Credit Products

Question 1

What is the primary purpose of a Home Equity Line of Credit (HELOC)?

Accepted Answer

To offer a revolving credit line secured by the borrower's home equity

Answer

To provide a lump-sum loan secured by the borrower's home equity

Answer

To consolidate unsecured debt into a single monthly payment

Answer

To finance the purchase of a new primary residence

Question 2

Which loan type features fixed monthly payments of equal amounts that fully repay principal and interest by the end of the term?

Accepted Answer

Fully amortizing loan

Answer

Interest-only loan

Answer

Balloon payment loan

Answer

Adjustable-rate loan

Question 3

What does the Loan-to-Value (LTV) ratio measure in mortgage lending?

Accepted Answer

The ratio of the loan amount to the appraised value of the collateral

Answer

The ratio of the borrower's monthly debt payments to gross monthly income

Answer

The ratio of the down payment to the borrower's liquid assets

Answer

The ratio of the interest rate to the loan origination fee

Question 4

A retail banker is explaining auto loans to a customer. Which statement about auto loans is MOST accurate?

Accepted Answer

Auto loans are secured by the vehicle, which serves as collateral

Answer

Auto loans are unsecured because the lender cannot repossess the vehicle

Answer

Auto loans always carry lower interest rates than mortgage loans

Answer

Auto loans require private mortgage insurance once LTV exceeds 80%

Question 5

Which federal law requires lenders to disclose the Annual Percentage Rate (APR) and total finance charges to borrowers?

Accepted Answer

Truth in Lending Act (TILA)

Answer

Community Reinvestment Act (CRA)

Answer

Equal Credit Opportunity Act (ECOA)

Answer

Fair Credit Reporting Act (FCRA)

Question 6

A customer applies for a personal loan with no collateral requirement. What type of loan is this?

Accepted Answer

Unsecured loan

Answer

Secured loan

Answer

Collateralized loan

Answer

Subordinated loan

Question 7

What distinguishes a subsidized federal student loan from an unsubsidized federal student loan?

Accepted Answer

The federal government pays interest on subsidized loans while the student is enrolled at least half-time

Answer

Subsidized loans accrue interest during in-school and grace periods; unsubsidized loans do not

Answer

Unsubsidized loans are only available to graduate students, not undergraduates

Answer

Subsidized loans have higher borrowing limits than unsubsidized loans