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

ECOA prohibits lenders from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.

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

ECOA requires lenders to notify applicants of adverse credit decisions within 30 days, stating specific reasons for the denial so applicants can understand and potentially address deficiencies.

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

HMDA requires financial institutions to collect, report, and disclose data about mortgage loan applications and originations to help identify discriminatory lending patterns and fair housing law violations.

Question 4

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

Accepted Answer

FICO Score

Answer

FICO (Fair Isaac Corporation) scores are the dominant credit scoring model used by U.S. mortgage lenders; Fannie Mae and Freddie Mac require FICO scores for conforming loans.

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

Predatory lending involves imposing unfair, deceptive, or abusive loan terms on borrowers, including charging excessive rates or fees not justified by risk — often targeting vulnerable populations.

(CRB) Certified Retail Banker Practice Test

(CRB) Certified Retail Banker Practice Test

CRB Lending & Credit Products 3