Certified Regulatory Compliance Manager (CRCM) — Question 36

Below mentioned is the necessary information that should be included in the ___________. Risk of payment shock""potential payment increases; how the new payment will be calculated when the introductory rate expires Ramifications of prepayment penalties""how they will be calculated, when they will be imposed
Ramifications of balloon payments Ramifications of the lack of escrowing for taxes and insurance""who is responsible for paying taxes and insurance and the fact that their costs may be substantial Cost of reduced documentation loans""whether there is a pricing premium required

Answer options

• A. Consumer protection principles
• B. Underwriting standards
• C. Workout arrangements
• D. None of these

Correct answer: A

Explanation

The correct answer is A, as consumer protection principles require transparency regarding payment shocks, prepayment penalties, and other financial implications for consumers. Options B and C are incorrect because underwriting standards and workout arrangements do not specifically address these consumer-facing risks. Option D is also incorrect as the information is indeed necessary and falls under consumer protection principles.