Question 1

Which one of the following is out of the FIRREA penalties included in the enforcement section of Adjusted Mortgage Regulation (12 CFR 34)?

Options :

A : Penalties up to $7,500 per day for violations of laws and regulations

B : Penalties up to $47,500 per day if violations or unsafe or unsound practices are engaged in recklessly or are part of a pattern of misconduct that causes more than a minimal loss to the bank or any pecuniary gain to the parties involved

C : Penalties up to $1,375,000 per day against persons who knowingly commit a violation and knowingly or recklessly cause a substantial loss to the bank or a substantial benefit to the party

D : Penalties up to $6,500 per day for violations of laws and regulations

Answer: A,C

Question 2

Which of the following is NOT a requirement of Regulation F?

Options :

A : Writing and maintaining policies and procedures for managing exposure to correspondent banks

B : Monitoring the exposure to correspondent banks on a regular basis

C : Establishing internal limits on exposure to correspondents

D : Providing quarterly reports to the board of directors of compliance audit results

Answer: D

Question 3

Your institution has identified a transaction by an existing depositor that should be blocked under

OFAC requirements. The branch manager contacts you for specific instructions. Before reporting the

transaction to OFAC, what should the bank do?

Options :

A : Reject the transaction

B : Process the transaction

C :

Close the customer’s account

D : Place the funds in an interest-bearing account

Answer: D

Question 4

_____________requires that a statement of purpose be obtained from borrowers whose loans are to be greater than $100,000 and that will be secured by margin stock. Loans made for the purpose of purchasing margin stock are subject to additional limitations

Options :

A : Regulation U

B : Regulation V

C : . Regulation Z

D : Regulation X

Answer: A

Question 5

Underwriting standards in Subprime Mortgage Lending include:

Options :

A : The borrower’s debt-to-income ratio should include the borrower’s total yearly housing-related payments as a percentage of gross monthly income

B : Institutions should have a clear policy governing the use of risk-layering features, such as reduced documentation loans or simultaneous second lien mortgages

C : Stated income and reduced documentation loans to subprime borrowers should be made only if there are clear, documented mitigating factors

D : Mitigating factors should be present when risk layering features are combined in order to support the underwriting decision and the borrower’s repayment capacity

Answer: A

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