Certified Regulatory Compliance Manager (CRCM) — Question 136

Cassandra Phillips requested a loan to purchase a boat. She asked for $15,000 at 7.5 percent for seven years. The bank considered her request but decided, considering her income and credit history, the best offer of credit the bank could make was $10,000 at 8.25 percent for five years. Rhonda Mays, the loan officer, wrote a letter, setting forth the terms the bank could offer. The letter was mailed on July 1. Ms. Phillips received the letter and began to look elsewhere for a loan on the terms and conditions she wanted. Does the bank have any additional responsibility to Ms. Phillips?

Answer options

• A. No. Because the bank made the offer of a loan, there is no further responsibility.
• B. No. Because the customer decided to look elsewhere, there is no further responsibility.
• C. Yes. The bank must follow up with a phone call to determine if Ms. Phillips is still interested.
• D. Yes. The bank must send an adverse action notice because Ms. Phillips did not take the bank's counteroffer.

Correct answer: D

Explanation

The correct answer is D because when a loan application is denied or a counteroffer is made that is not accepted, the bank is legally required to send an adverse action notice to inform the applicant of their rights. Options A and B are incorrect as they overlook the bank's duty to communicate the outcome of the application process, while option C is incorrect since a phone call is not a required action in this scenario.