Certified Regulatory Compliance Manager (CRCM) — Question 24

Guidelines for National Banks to Guard against Predatory and Abusive Lending Practices""AL-2003-2 says that refusing to purchase the following types of loans can reduce the possibility of purchasing abusive mortgage loans EXCEPT:

Answer options

• A. Loans in which the lender has not adequately determined the borrower's ability to repay the debt
• B. Loans subject to the Home Ownership and Equity Protection Act (HOEPA)
• C. Loans with points and fees in excess of 5 percent of the loan amount, except in cases where the higher amount was to prevent the loan from being unprofitable
• D. Loans in which a prepaid multiple-premium credit insurance policy was included in the amount financed

Correct answer: D

Explanation

The correct answer is D because including a prepaid multiple-premium credit insurance policy does not inherently indicate an abusive lending practice, unlike the other options which relate to borrower repayment ability, regulatory oversight, and excessive fees. Options A, B, and C highlight significant risk factors associated with predatory lending that can be actively avoided.