Certified Regulatory Compliance Manager (CRCM) — Question 34

If the institution offers both full and reduced documentation loans and there is a pricing premium attached to the reduced documentation loan, the consumer should:

Answer options

• A. Be alerted to this fact
• B. Not be alerted to this fact
• C. Provide consumers with a clear statement of the options available
• D. Not lead consumers with payment option ARMs to choose a non-amortizing or negatively amortizing payment

Correct answer: A

Explanation

The correct answer is A because consumers need to be informed about any pricing premiums associated with reduced documentation loans to make informed financial decisions. Options B, C, and D do not adequately address the necessity of transparency regarding loan costs and options, which is essential for consumer protection.