Certified Regulatory Compliance Manager (CRCM) — Question 22

Which of the following usually comes under the heading of abusive lending?

Answer options

• A. Abusive lending usually is defined by a variety of lending practices
• B. It is the excessive and hidden fees in the amount financed
• C. A fundamental characteristic is aggressive marketing of credit to prospective borrowers who cannot repay it on the terms offered
• D. Typically, such loans are underwritten on the liquidation value of the collateral rather than the creditworthiness of the borrower

Correct answer: A, C, D

Explanation

The correct answers A, C, and D highlight various aspects of abusive lending, including the diverse practices involved, the aggressive marketing tactics aimed at unqualified borrowers, and the focus on collateral value over creditworthiness. Option B, while it mentions a negative aspect of lending, does not encompass the broader definition of abusive lending as the other options do.