CRB Lending & Credit Products 3

Question 1

Under the Equal Credit Opportunity Act (ECOA), a lender may NOT deny credit based on which factor?

Accepted Answer

The applicant's marital status

Answer

The applicant's credit score

Answer

The applicant's debt-to-income ratio

Answer

The applicant's employment length

Question 2

A bank is required to provide an Adverse Action Notice when it denies a credit application. Which law mandates this notice?

Accepted Answer

Equal Credit Opportunity Act (ECOA)

Answer

Fair Housing Act

Answer

Home Mortgage Disclosure Act (HMDA)

Answer

Bank Secrecy Act (BSA)

Question 3

What is the primary purpose of the Home Mortgage Disclosure Act (HMDA)?

Accepted Answer

To require lenders to collect and disclose data on mortgage lending patterns

Answer

To set maximum interest rates on federally insured mortgages

Answer

To guarantee repayment of mortgage loans to approved lenders

Answer

To mandate minimum down payments on all residential mortgages

Question 4

Which credit scoring model is most widely used by mortgage lenders in the United States?

Accepted Answer

FICO Score

Answer

VantageScore 3.0

Answer

TransUnion CreditVision

Answer

Experian PLUS Score

Question 5

A retail banker identifies a pattern where a lender charges significantly higher interest rates and fees to borrowers in minority neighborhoods regardless of creditworthiness. This is an example of:

Accepted Answer

Predatory lending

Answer

Risk-based pricing

Answer

Redlining

Answer

Steering

Question 6

What does the 'Capital' component of the Five Cs of Credit refer to?

Accepted Answer

The borrower's assets and net worth that could be used to repay debt

Answer

The city or region where the borrower resides and conducts business

Answer

The current economic environment and interest rate conditions

Answer

The legal standing and regulatory charter of the lending institution

Question 7

A homeowner has built up $80,000 in home equity and wants to access it for home renovations. They prefer a fixed disbursement rather than a revolving line. Which product is MOST appropriate?

Accepted Answer

Home Equity Loan (second mortgage)

Answer

Home Equity Line of Credit (HELOC)

Answer

Cash-out refinance at an adjustable rate

Answer

Construction-to-permanent loan