Certified Regulatory Compliance Manager (CRCM) — Question 19

The banking agencies issued two guidances to caution depository institutions about risks involved in funding non-depository lenders that engage in predatory lending. Predatory and abusive practices include:

Answer options

• A. High-pressure sales
• B. Excessive fees and interest rate including fees for unnecessary products
• C. Balloon payments that may never cause foreclosures
• D. Excessive refinancing with fees included in the new loan

Correct answer: A, B

Explanation

Options A and B correctly identify high-pressure sales tactics and excessive fees as common predatory practices. Option C describes balloon payments that do not necessarily lead to foreclosures, which is not inherently predatory, and Option D refers to refinancing, which while potentially problematic, does not directly relate to predatory lending practices.