Question 1

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

Options :

A : Consumer protection principles

B : Underwriting standards

C : Workout arrangements

D : None of these

Answer: A

Question 2

Which of the following is an accurate statement according to the requirements of the customer identification program regulations?

Options :

A : A bank must always require documentary verification of a customer’s identification

B : A bank may waive any part of the CIP requirements if senior management approves the waiver and there is a good cause

C : A physical address or a post office box is acceptable for any new customer

D : The bank’s CIP program must enable it to form a reasonable belief about the identity of the person

Answer: D

Question 3

Under content of disclosures long term disclosures may include the following, as applicable EXCLUDING:

Options :

A : Notification that the product is optional

B : Explanation of debt-suspension agreement

C : Lump-sum payment of fee with no refund

D : Refund of fee paid in lump sum

Answer: D

Question 4

Which of the following banks CANNOT select Montana as its home state for deposit production purposes?

Options :

A : ABC National Bank with its headquarters in Missoula, Montana

B : XYZ State Bank, with a Montana state charter

C : ACME National Bank with its headquarters in Minneapolis, MN, but with most of its branches and the majority of its loans in Montana

D : Friendly Bank, a U.S. branch of a foreign bank with two U.S. locations, one in Montana and one in Wyoming

Answer: C

Question 5

Martha Smith of First National Bank is attempting to close a large commercial loan to a manufacturing equipment company. In negotiating the interest rate on the loan Martha states that if the company will move some of its demand accounts to the bank, it could get a lower interest rate. Is this wrong?

Options :

A : Yes. It violates the anti-tying provisions.

B : Yes. It is a restraint of trade.

C : No, unless moving the accounts is a condition of the loan..

D : No. The bank may condition the loan on the customer placing a deposit in the bank.

Answer: D

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