Certified Regulatory Compliance Manager (CRCM) — Question 113

Is the renewal of a loan considered to be a new extension of credit for purposes of valuing the collateral under Regulation U?

Answer options

• A. Yes
• B. Yes, if any additional amounts are added to the loan balance
• C. Yes, if any amounts other than interest, service charges, or taxes are added to the loan balance
• D. No, a renewal is never considered to be a new credit

Correct answer: C

Explanation

The correct answer is C because under Regulation U, a renewal is treated as a new extension of credit only if amounts other than interest, service charges, or taxes are included. Options A and B are too broad, as they do not specify what amounts affect the renewal's classification. Option D is incorrect because it outright denies any possibility of a renewal being considered new credit, which is not accurate under certain conditions.