Certified Regulatory Compliance Manager (CRCM) — Question 28

Which of the following are recommended practices in Avoiding Predatory and Abusive Lending Practices in Brokered and Purchased Loans""AL-2003-3?

Answer options

• A. Have written agreements with third-party brokers that specifically and clearly address the rights and responsibilities of each party. Written agreements should 1. Ensure that no inappropriate compensation exists 2. Provide for indemnification to the bank 3. Enable banks to exit the arrangement through a termination procedure 4. Provide for the bank's and the OCC's ability to access all records of the third party and to audit the third party's operations
• B. Verify that brokers and originators have established policies to ensure that loans will comply with all applicable laws
• C. Establish an effective management information system to monitor the performance of third-party brokers and originators
• D. All of the above

Correct answer: D

Explanation

The correct answer is D because all the listed practices are essential for mitigating risks associated with predatory lending. Option A emphasizes the need for clear agreements, which are crucial for accountability; Option B highlights the importance of compliance with laws; and Option C focuses on monitoring performance, which is necessary for ongoing oversight. Each of these practices contributes to a comprehensive approach to avoiding abusive lending practices.