Untitled Deck

Question 1

Adjustable Rate Mortgage (ARM)

Answer 1

A loan that has a variable rate (meaning the rate can go up after consummation), is secured by the consumer’s principal dwelling, and has a term of greater than one year.

Question 2

Adverse Action

Answer 2

A refusal to grant credit on substantially the same terms requested by the applicant, unless a counteroffer is made by the creditor and the applicant accepts within 90 days.

Question 3

Adverse Action Notice

Answer 3

A notice informing loan applicants that their loan has been denied. The bank must provide this notice in writing within 30 days of receiving a completed application for consumer credit (looser requirements are in place for commercial credit).

Question 4

Annual Percentage Rate (APR)

Answer 4

Denotes a loan’s cost expressed as an annualized percentage rate. The APR reflects interest and other finance charges.

Question 5

Annual Percentage Yield (APY)

Answer 5

A percentage rate reflecting the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a 365-day period and calculated according to the rules in Appendix A of Regulation DD.

Question 6

Average Prime Offer Rate (APOR)

Answer 6

A survey-based estimate of market rates for the lowest-risk prime mortgages. Used to determine whether a loan falls into the Higher-Priced Mortgage Loan (HPML) category, and in other provisions of Regulation Z such as the Higher-Cost Mortgage rules, and the Qualified Mortgage definition.

Question 7

B Notice

Answer 7

Notice received from the IRS informing the bank that a customer has not provided a correct taxpayer identification number (TIN). Unless the bank receives a correct number, it must begin withholding taxes on payments to the account.

Question 8

Business Day

Answer 8

A day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions. However, for purposes of the right of rescission, certain requirements of the TILA-RESPA Integrated Disclosures (TRID) rules, and certain other provisions, it is defined as all days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Juneteenth Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.

Question 9

Changed Circumstance

Answer 9

Extraordinary event beyond the control of any interested party or another unexpected event specific to the consumer or transaction; information specific to the consumer or transaction that the creditor relied upon when providing initial disclosures required under the TRID rules that was inaccurate or changed after the disclosures were provided; or new information specific to the consumer or transaction that the creditor did not rely on when providing original disclosures required under the TRID rules.

Question 10

Closed-End Credit

Answer 10

All consumer credit other than open-end credit, defined as a plan in which repeated transactions are reasonably contemplated, finance charges are imposed on unpaid balances from time to time, and the amount of credit up to a limit is made available to the consumer to the extent any unpaid balance is paid.

Question 11

Closing Disclosure (CD)

Answer 11

TILA-RESPA Integrated Disclosure (TRID) rules disclosure that provides information on the final costs of the mortgage transaction.

Question 12

Consumer Credit

Answer 12

Credit offered or extended to a consumer (natural person or covered trust) for personal, family, or household purposes.

Question 13

Consumer Lease

Answer 13

A lease covering personal property made to an individual for personal, family, or household purposes.

Question 14

Consumer Report

Answer 14

Any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.

Question 15

Investment Test

Answer 15

Evaluates a bank’s record of helping to meet the community credit needs of its assessment area through qualified investments as defined by the Community Reinvestment Act.

Question 16

Lending Test

Answer 16

Evaluates a bank’s record of helping to meet the credit needs of its assessment area by considering the bank’s home mortgage, small-business, small farm, and community development lending.

Question 17

Service Test

Answer 17

Analyzes under the Community Reinvestment Act the availability, effectiveness, and innovativeness of a bank’s systems for delivering retail banking products and services.

Question 18

Credit Score

Answer 18

Numerical value or categorization derived from statistics or modeling used to predict the likelihood of certain credit behaviors.

Question 19

Currency Transaction Report (CTR)

Answer 19

Required by the Bank Secrecy Act for all currency transactions in excess of $10,000 in one business day, including deposits, withdrawals, currency exchanges (for example, changing $100 bills for $20 bills), and loan proceeds or payments made in cash. CTRs must list detailed information about the customer(s) conducting the transaction. CTRs must be filed electronically and be sent to Financial Crimes Enforcement Network (FinCEN) within 15 days of the transaction date.

Question 20

Customer

Answer 20

Any consumer who has a customer relationship (a continuing relationship) with the bank.

Question 21

Debt Collector

Answer 21

Person or entity that uses the telephone, mail, or similar means in any business the principal purpose of which is to collect debts owed to others, or who regularly collects, or attempts to collect, debts owed to others.

Question 22

Electronic Fund Transfer (EFT)

Answer 22

A transfer of funds initiated through an electronic terminal, telephone, computer, or magnetic tape to authorize a financial institution to debit or credit a consumer deposit account. It includes point-of-sale transfer, automated teller machine transfers, and direct deposits or withdrawals, among others.

Question 23

Higher-Priced Mortgages (HPML)

Answer 23

A closed-end consumer credit transaction secured by the consumer’s principal dwelling in which the loan APR exceeds the average prime offer rate (APOR) for a comparable transaction by a certain percentage.

Question 24

Insider

Answer 24

An insider is defined as an executive officer, director, principal shareholder, or related interest of the bank or its holding company or affiliates.

Question 25

Loan Application Register (LAR)

Answer 25

Data produced by lenders required by the Home Mortgage Disclosure Act (HMDA). The HMDA-LAR contains information on dwelling-secured loans and line of credit applications. It is submitted annually to the Consumer Financial Protection Bureau (CFPB).

Question 26

Loan Estimate (LE)

Answer 26

TILA-RESPA Integrated Disclosure (TRID) rules disclosure that provides information on the key features, costs, and risks of the mortgage loan for which they are applying.

Question 27

Margin Stock

Answer 27

Equities traded on an exchange (NYSE, NASDAQ, etc.).

Question 28

Marketing Service Agreements

Answer 28

Agreements between providers of services in a mortgage transaction, such as a lender, real estate agent or broker, or a title company; may also involve third parties who are not settlement providers, such as membership organizations, with a focus on marketing-related services for mortgage loans.

Question 29

Metropolitan Statistical Area (MSA)

Answer 29

Defined by the Bureau of the Census, an MSA is an urban area with a population of at least 50,000 people and a total metropolitan area with a population of at least 100,000.

Question 30

Mortgage Loan Originator (MLO)

Answer 30

Person who both (1) takes a consumer residential mortgage loan application secured by a dwelling; AND (2) offers or negotiates terms for compensation or gain.

Question 31

Office of Foreign Asset Control (OFAC)

Answer 31

A financial intelligence and enforcement agency of the U.S. Treasury Department charged with planning and execution of economic and trade sanctions in support of U.S. national security and foreign policy objectives.

Question 32

Open-End Credit

Answer 32

A plan in which repeated transactions are reasonably contemplated, finance charges are imposed on unpaid balances from time to time, and the amount of credit up to a limit is made available to the consumer to the extent any unpaid balance is paid.

Question 33

Politically Exposed Persons (PEPs)

Answer 33

A senior judicial or non-elected administrative official of a foreign government, or certain family members.

Question 34

Principal Shareholder

Answer 34

Anyone who owns, controls, or has the power to vote, either alone or in conjunction with others, more than 10 percent of the bank’s stock.

Question 35

Prohibited Basis

Answer 35

Refers to characteristics (race, gender, age, etc.) that a bank may not use in making credit decisions. Two laws set out prohibited bases: the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA). The ECOA applies to all credit transactions and has nine prohibited bases: race, color, national origin, religion, gender, age, marital status, the receipt of public assistance income, and the exercise of rights under the Consumer Credit Protection Act.

Question 36

Purpose Credit

Answer 36

A loan extended for the purpose of purchasing or carrying margin stock.

Question 37

Red Flags

Answer 37

Patterns, practices, and specific activities that indicate the possible existence of identity theft. These include “precursor” activities directed at current accountholders, as well (such as phishing).

Question 38

Equal Credit Opportunity Act/ Regulation B

Answer 38

The Equal Credit Opportunity Act (ECOA), Title VII of the Consumer Credit Protection Act, prohibits discrimination on a delineated basis. The Act also requires creditors to provide applicants with the underlying reasons to deny credit and to provide to applicants a copy of appraisals and other written valuations in certain instances, among other operational requirements. Regulation B is the CFPB regulation that implements ECOA (12 CFR 1002).

Question 39

Regulation BB

Answer 39

Federal Reserve’s regulation that implements the Community Reinvestment Act (12 CFR 228). Note the OCC and FDIC have separate CRA regulations.

Question 40

Home Mortgage Disclosure Act/ Regulation C

Answer 40

The Home Mortgage Disclosure Act (HMDA) requires mortgage lenders to maintain, report, and publicly disclose information about mortgage loan applications. These data help show whether lenders are serving the housing needs of their communities; they give public officials information that helps them make decisions and policies; and they shed light on lending patterns that could be discriminatory. Regulation C is the CFPB’s implementing regulation for HMDA (12 CFR 1003).

Question 41

Expedited Funds Availability Act/ Regulation CC

Answer 41

The Expedited Funds Availability Act (EFAA) standardizes hold periods on demand deposits commercial banks may take and regulates institutions' use of deposit holds. It also regulates other aspects of the check-processing system. Regulation CC implements the EFAA (12 CFR 229).

Question 42

Regulation D

Answer 42

Implements the Federal Reserve Act requirement that banks maintain reserves on certain deposits (12 CFR 204).

Question 43

Truth in Savings Act/ Regulation DD

Answer 43

The Truth in Savings Act (TISA) enables consumers to make informed decisions about deposit accounts. It requires banks to provide to consumers disclosures about terms and costs of deposit accounts and imposes requirements for deposit account advertisements. Regulation DD is the CFPB regulation that implements TISA (12 CFR 1030).

Question 44

Electronic Fund Transfer Act/ Regulation E

Answer 44

The Electronic Fund Transfer Act (EFTA) protects consumers when they transfer funds electronically, including through the use of debit cards, automated teller machines (ATMs), and automatic withdrawals from a bank account. Regulation E is the CFPB’s implementing regulation for the EFTA.

Question 45

Regulation FF

Answer 45

Implements the Obtaining and Using Medical Information in Connection with Credit Act (12 CFR 232). Creates exceptions to the statutory prohibition against obtaining or using medical information in connection with determining eligibility for credit.

Question 46

Regulation G

Answer 46

Implements the S.A.F.E. Mortgage Licensing Act—Federal Registration of Residential Mortgage Loan Originators (12 CFR 1007).

Question 47

Regulation GG

Answer 47

Implements the Prohibition on Funding of Unlawful Internet Gambling (12 CFR 233).

Question 48

Regulation M

Answer 48

The Federal Reserve Board regulation that implements the provisions of the Consumer Leasing Act.

Question 49

Regulation O

Answer 49

Implements the portion of the Financial Institutions Regulatory Act governing lending by banks to insiders (12 CFR 215).

Question 50

Privacy of Consumer Financial Information/ Regulation P

Answer 50

Implements the subsection of the Gramm-Leach-Bliley Act that governs the treatment of nonpublic information about consumers maintained by financial institutions. Regulation P is a CFPB regulation, but each agency has an identical rule for institutions under their jurisdiction.

Question 51

Regulation R

Answer 51

The joint Securities and Exchange Commission (SEC) and Federal Reserve Board regulation that implements the bank broker provisions of the Gramm-Leach-Bliley Act of 1999. Regulation R defines the scope of securities agency activities that banks may conduct without registering with the SEC as a broker.

Question 52

Regulation U

Answer 52

Implements a portion of the Securities Exchange Act of 1934. It applies margin limits and requirements on securities credit by banks (12 CFR 221).

Question 53

Fair Credit Reporting Act/ Regulation V

Answer 53

The Fair Credit Reporting Act (FCRA) promotes the accuracy, integrity, fairness, and privacy of consumer information contained in the files of consumer reporting agencies, and regulates how that information may be disclosed and used. It was intended to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports. Regulation V is the CFPB regulation that implements various sections of the FCRA as amended by the Fair and Accurate Credit Transaction Act (FACT Act) (12 CFR 1022).

Question 54

Regulation W

Answer 54

Regulation that places guidelines on transactions between depository institutions, such as banks, and their affiliates (12 CFR 223).

Question 55

Real Estate Settlement Procedures Act/Regulation X

Answer 55

The Real Estate Settlement Procedures Act (RESPA) seeks to reduce unnecessarily high settlement costs by requiring disclosures to homebuyers and sellers, and by prohibiting abusive practices in the real estate settlement process. All borrowers must be given information about real estate transactions, settlement services, and relevant consumer protection laws, as well as the possibility of mortgage servicing being transferred. Regulation X is the CFPB regulation that implements the RESPA Real Estate Settlement Procedures Act of 1974 (12 CFR Part 1024).

Question 56

Truth in Lending Act/ Regulation Z

Answer 56

The Truth in Lending Act (TILA) promotes the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed, among many other requirements. Regulation Z is the CFPB regulation that implements TILA (12 CFR 1026).

Question 57

Risk Based Pricing Notice

Answer 57

A notice provided to a consumer when, based in whole or in part on the consumer’s consumer report, the creditor grants, extends, or otherwise provides credit to the consumer on material terms that are materially less favorable than the most favorable terms it grants to a substantial portion of its other consumers.

Question 58

Savings Account

Answer 58

A deposit or account such as a passbook savings account, statement savings account, or a money market deposit account (MMDA).

Question 59

Special Flood Hazard Areas (SFHA)

Answer 59

An area the Federal Emergency Management Agency (FEMA) has deemed to have a high risk of flooding.

Question 60

Telephone Consumer Protection Act (TCPA)

Answer 60

Law that restricts telephone solicitations (i.e., telemarketing) and the use of automated telephone equipment and limits the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines. Falls under the regulatory authority of the Federal Communication Commission (FCC).

Question 61

Transaction Account

Answer 61

A demand deposit account (DDA), meaning a checking account, a negotiable order of withdrawal (NOW) account, a share draft account (applicable to credit unions), an automatic transfer account, or any other transaction account described in Federal Reserve Regulation D.

Question 62

TRID

Answer 62

Acronym for the TILA-RESPA Integrated Disclosures rule mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) to integrate the mortgage loan disclosures under TILA and RESPA. TRID forms include the Loan Estimate (LE) and the Closing Disclosure (CD).

Question 63

Time Account

Answer 63

An account in which the depositor cannot withdraw the funds for at least six days after the date of deposit or a previous withdrawal. If the funds are withdrawn prior to these limits, the bank must charge an early withdrawal penalty.

Question 64

Non-affiliated Third Parties

Answer 64

A third-party entity that is not a company that controls, is controlled by, or is under common control with another company. Control for this purpose means ownership or the power to vote, directly or indirectly, 25% of any class of voting shares.

Question 65

Currency Transaction Report (CTR) Exemptions

Answer 65

Provisions allowing for CTRs to not be filed in otherwise required situations. There are two types (known as “Phases” I and II): Phase I exemptions, which are automatic; and Phase II, for “non-listed business,” in which certain requirements must be met.

Question 66

Ability to Repay (ATR)

Answer 66

Requirement in dwelling-secured closed-end loans to make a reasonable and good faith determination at or before consummation of the loan that the consumer will have a reasonable ability to repay the loan according to its terms.

Question 67

Abusive Act or Practice

Answer 67

An act practice that: materially interferes with a consumer’s ability to understand the product or service; takes advantage of a consumer’s lack of understanding of the costs, risks, or conditions; takes advantage of the consumer’s inability to protect the consumer’s own interests; or takes advantage of the consumer’s reliance on the premise that the bank would act in the consumer’s interest.

Question 68

Access Device

Answer 68

A card, code, or other means of access to a consumer's account, or any combination thereof, that may be used by the consumer to initiate electronic fund transfers.

Question 69

Address Discrepancy

Answer 69

A common red flag, banks must address the validity of change of address requests for consumer debit and credit card accounts. A typical example would be an address change followed within 30 days by a request for a new debit or credit card.

Question 70

Adverse Action

Answer 70

As defined by the Fair Credit Reporting Act, a refusal to grant credit or the customer’s request due wholly or partially to information on a consumer report.

Question 71

Affiliate

Answer 71

A company that controls, is controlled by or is under common control with another company. Control for this purpose means ownership or the power to vote, directly or indirectly, 25% of any class of voting shares.

Question 72

Affiliated Business Arrangement

Answer 72

Exists where bank personnel (or that person’s associate) refer a settlement service to a particular provider where that provider has an affiliate relationship with the referring party, or the referring party owns one percent or more of the provider.

Question 73

Amount Financed

Answer 73

Equals the principal loan amount (minus any downpayment) plus any non-finance charge items that are financed minus any prepaid finance charges.

Question 74

Application

Answer 74

An oral or written request for an extension of credit made in accordance with procedures established by the creditor for the type of credit requested.

Question 75

Application

Answer 75

As defined by Regulation C (HMDA), an application is an “oral or written request for a covered loan that is made in accordance with procedures the Financial Institution uses for the type of credit requested.”

Question 76

Application

Answer 76

Submission of a consumer's financial information for the purposes of obtaining an extension of credit. However, for purposes of TRID, an application is considered the submission by a consumer of the following information: the consumer's name, income, social security number to obtain a credit report, property address, an estimate of the value of the property, and the mortgage loan amount sought.

Question 77

Appraisal Notice

Answer 77

Lenders must notify applicants within three business days of receiving an application for a loan or line of credit secured by a first lien on a 1- to 4-family dwelling of their right to receive a free copy of written appraisals and valuations.

Question 78

Assessment Area

Answer 78

Community Reinvestment Act activities should be evaluated by its primary federal regulator. The assessment area must include any geographies in which the bank has its main office, and branches, and deposit-taking ATMs, as well as areas where the bank has originated a substantial portion of its loans.

Question 79

Bank Secrecy Act (BSA)

Answer 79

Enacted in 1970, part of the Currency and Foreign Transactions Reporting Act. Requires financial institutions to assist government agencies in efforts to curb financial crimes by imposing recordkeeping and reporting requirements.

Question 80

Banking Day

Answer 80

That part of any business day on which an office of a bank is open to the public for carrying on substantially all of its banking functions.

Question 81

Beneficial Owner Rules

Answer 81

Requirement that banks collect and verify the personal information of the real people who own, control, and profit from companies when they open accounts. The requirement is intended to reduce the increased risk of a possible concealed owner or control person of an account.

Question 82

Blocking

Answer 82

Also known as “freezing,” refers to the practice of prohibiting against transfers or transactions involving funds or assets of blocked property to the blocked individual or entity.

Question 83

Bonus

Answer 83

A premium, gift, award, or other consideration worth more than $10 (whether in the form of cash, credit, merchandise, or any equivalent) given or offered to a consumer during a year in exchange for opening, maintaining, renewing, or increasing an account balance.

Question 84

Business Day

Answer 84

Any day that is not a weekend (Saturday or Sunday) or Federal holiday (New Year’s Day, Martin Luther King Day, President’s Day, Memorial Day, July 4, Labor Day, Columbus Day, Veteran’s Day, Thanksgiving, and Christmas Day).

Question 85

Case-by-Case Hold

Answer 85

Provides the bank a reason to delay the availability of an item(s), but only to the availability limitation prescribed by Regulation CC. For this reason, case-by-case holds will be available only to institutions that, as a policy, make funds available sooner than the Regulation CC schedule normally provides.

Question 86

CFPB Consumer Complaints and Resolution Guidance

Answer 86

Guidance issued by the CFPB emphasizing the importance of a complaint management program at banks as part of its Compliance Management System (CMS), as well as spelling out critical elements of a bank’s program.

Question 87

Change in Terms Notice

Answer 87

Written notice must be provided at least 21 days before the effective date of the change if a fee is increased or an adverse change is made to a disclosed item.

Question 88

Change in Terms Notice

Answer 88

Must be provided to the consumer at least 30 days before the date of the change if the change will adversely affect the Annual Percentage Yield (APY) or a disclosed term.

Question 89

Charge Card

Answer 89

A credit card on an account for which no periodic rate is used to compute a finance charge.

Question 90

CHARM Booklet

Answer 90

The Consumer Handbook on Adjustable Rate Mortgages, a CFPB publication that must be provided at the time of application for an adjustable-rate mortgage loan.

Question 91

Chattel Dwelling Loan

Answer 91

A loan secured by a dwelling but not the underlying real property. Essentially a loan collateralized by a mobile home but not the land.

Question 92

Check 21

Answer 92

Refers to the Check Clearing for the 21st Century Act, the federal law designed to enable banks to handle checks electronically, thereby making check processing faster and more efficient. Its provisions are incorporated into Regulation CC.

Question 93

Community Development

Answer 93

Activities that promote economic development, stabilize, or revitalize low- to moderate-income (LMI) geographies, designated disaster areas, or distressed or underserved nonmetropolitan middle-income geographies. These efforts can include affordable housing or community services targeting LMI individuals, among others.