Certified Regulatory Compliance Manager (CRCM) — Question 26

The purpose of advisory letter in Avoiding Predatory and Abusive Lending Practices in Brokered and Purchased Loans- AL-2003-3 is to:

Answer options

• A. Adopt sound credit underwriting policies
• B. Alert national banks to the risks they take if they make loans through brokers or purchase loans that contain or reflect abusive or predatory terms or practices
• C. Adopt policies that address the circumstances under which the bank would make loans that have features associated with abusive lending practices
• D. Make loans secured by the consumer's home but with high, up-front fees that are financed and secured by the home

Correct answer: B

Explanation

The correct answer is B because the advisory letter serves to inform national banks of the potential risks associated with loans made through brokers or that contain predatory terms. Options A and C suggest actions related to underwriting policies, but do not address the awareness of risks. Option D describes a specific lending practice that is considered predatory, which is contrary to the purpose of the advisory letter.