COMPLIANCE TRAINING QUESTIONS
AND ANSWERS WITH SOLUTIONS 2024
What does the Fair Credit Report protect? - ANSWER Protects the interests of persons about whom
information is collected and distributed by consumer reporting agencies
Who does FCRA apply to? - ANSWER Individuals only, NOT entities
FCA primarily examines FCRA for compliance in conjunction with reviewing ____? - ANSWER Adverse
action notices, risk-based pricing notices
What is adverse action? - ANSWER A denial or cancellation of, increase in charge for, or reduction or
other unfavorable change in terms or coverage or amount of credit or insurance. A denial of
employment or other decision for employment purposes that is adverse to the employee. A denial or
cancellation of, increase in charge for, or other unfavorable change in the terms of any government
license or benefit where financial responsibility or status must be considered. An action or
determination made in connection with an application by or transaction initiated by the consumer and is
adverse to the consumer.
What are the adverse action disclosure requirements? - ANSWER Name, address, telephone number of
the CRA furnishing the report and a statement that the CRA did not make the decision to take the
adverse action and is unable to provide the consumer with specific reasons why the adverse action was
taken. A notice of the right to obtain a free copy of the consumer report from the CRA including notice of
the 60 day period for obtaining a copy and the right to dispute with the CRA the accuracy or
completeness of the info in the consumer report
FACT Act of 2003 - ANSWER Financial institutions and creditors with covered amounts must implement a
written ID theft prevention program to detect, prevent and mitigate ID theft in connection with the
opening of a covered account or any existing covered account
Risk-based pricing notice - ANSWER If the institution is setting terms (interest rate, length of loan etc.)
based on credit score, they need to provide this notice with the credit score with the source, date etc.
When were borrower rights enacted in congress? - ANSWER 1987
,What do the borrower rights include? - ANSWER 1) Notification of interest rates
2) Disclosure of loan documents
3) Distressed loan restructuring
4) Notice of actions taken on loan applications/DLR's
5) Credit Review Committee appeals
6) An opportunity to repurchase property lost in foreclosure or other liquidation actions (Right of First
Refusal)
What is the definition of a loan under borrower rights? - ANSWER Credit to a farmer for an AG or aquatic
purpose, including other credit needs and processing and marketing. Excludes rural housing, farm
related businesses and loans to cooperatives made under title 3
What is the definition of qualified lender under borrower rights? - ANSWER System institutions (except
banks for cooperatives). (Non-qualified lenders would be other financial institutions outside the system)
What is a loan participation definition under borrower rights? - ANSWER A fractional undivided interest
in the principal amount of a loan that is sold by a lead lender to a participating institution
When does a participation receive borrower rights? - ANSWER If the lead lender is a System lender
What is a loan syndication definition under borrower rights - ANSWER A multi lender transaction in
which each member of the lending syndicate has a direct contractual relationship with the borrower (Do
NOT get borrower rights)
When can borrower rights be waived? - ANSWER Secondary market and non-qualified lender sales and
loan syndications, and SBA guaranteed loans
All waivers must be done ___ and ____. - ANSWER Voluntarily and in writing
Loan sales to FCA Institution (can/can not) be waivered - ANSWER Can not. Loans made by qualified
lenders and interest in such loans that are sold to other qualified lenders are subject to borrower rights
, Loan designated for sale into a secondary market (are/are not) exempt from borrower rights? - ANSWER
Are. The borrower rights provision of the act exempts loans designated for sale into a secondary market
when designated for sale at the time the loan is made and actually sold within 180 days.
If the loan is not sold into a secondary market during the 180 day period, what happens on the 181st
day? - ANSWER Borrower rights reattach on the 181st day
Loan sales to nonqualified lenders (waiver possible/not possible) - ANSWER Possible. Requires the
purchaser to honor borrower rights unless the borrower waives those rights. Additional disclosures must
be given to the borrower when requesting a waiver of borrower rights
Lenders may use e-commerce for borrower right disclosures except for ___, ___, and ____ - ANSWER
Default, foreclosure, and related adverse actions when the loan is secured by a primary residence
What general loan disclosures must a qualified lender disclose in writing? - ANSWER - Interest rate of the
loan
- EIR of the loan
- Amount of stock or participation certificates that a borrower is required to purchase in connection with
the loan and included in the calculation of the EIR of the loan.
- All loan origination charges included in the EIR
- Statement that stock or participation certificates that borrowers are required to purchase are at risk
and may only be retired at the discretion of the board of the institution
- Various types of loan options available to borrowers with an explanation of the terms and borrower
rights that apply to each type of loan
What is EIR? - ANSWER A measure of the cost of credit expressed as an annual percentage rate that
shows the effect of the following costs on the interest rate (amount of stock or participation certificates
purchased, loan origination charges paid by a borrower to the qualified lender)
When do EIR disclosures apply? - ANSWER Only on loans made by qualified lenders where the loans are
not subject to the Truth in Lending act
For loans with more than one borrower, the lender needs to only provide disclosure to who? - ANSWER
The primary obligor. Borrowers may designate IN WRITING who is to receive the disclosure
AND ANSWERS WITH SOLUTIONS 2024
What does the Fair Credit Report protect? - ANSWER Protects the interests of persons about whom
information is collected and distributed by consumer reporting agencies
Who does FCRA apply to? - ANSWER Individuals only, NOT entities
FCA primarily examines FCRA for compliance in conjunction with reviewing ____? - ANSWER Adverse
action notices, risk-based pricing notices
What is adverse action? - ANSWER A denial or cancellation of, increase in charge for, or reduction or
other unfavorable change in terms or coverage or amount of credit or insurance. A denial of
employment or other decision for employment purposes that is adverse to the employee. A denial or
cancellation of, increase in charge for, or other unfavorable change in the terms of any government
license or benefit where financial responsibility or status must be considered. An action or
determination made in connection with an application by or transaction initiated by the consumer and is
adverse to the consumer.
What are the adverse action disclosure requirements? - ANSWER Name, address, telephone number of
the CRA furnishing the report and a statement that the CRA did not make the decision to take the
adverse action and is unable to provide the consumer with specific reasons why the adverse action was
taken. A notice of the right to obtain a free copy of the consumer report from the CRA including notice of
the 60 day period for obtaining a copy and the right to dispute with the CRA the accuracy or
completeness of the info in the consumer report
FACT Act of 2003 - ANSWER Financial institutions and creditors with covered amounts must implement a
written ID theft prevention program to detect, prevent and mitigate ID theft in connection with the
opening of a covered account or any existing covered account
Risk-based pricing notice - ANSWER If the institution is setting terms (interest rate, length of loan etc.)
based on credit score, they need to provide this notice with the credit score with the source, date etc.
When were borrower rights enacted in congress? - ANSWER 1987
,What do the borrower rights include? - ANSWER 1) Notification of interest rates
2) Disclosure of loan documents
3) Distressed loan restructuring
4) Notice of actions taken on loan applications/DLR's
5) Credit Review Committee appeals
6) An opportunity to repurchase property lost in foreclosure or other liquidation actions (Right of First
Refusal)
What is the definition of a loan under borrower rights? - ANSWER Credit to a farmer for an AG or aquatic
purpose, including other credit needs and processing and marketing. Excludes rural housing, farm
related businesses and loans to cooperatives made under title 3
What is the definition of qualified lender under borrower rights? - ANSWER System institutions (except
banks for cooperatives). (Non-qualified lenders would be other financial institutions outside the system)
What is a loan participation definition under borrower rights? - ANSWER A fractional undivided interest
in the principal amount of a loan that is sold by a lead lender to a participating institution
When does a participation receive borrower rights? - ANSWER If the lead lender is a System lender
What is a loan syndication definition under borrower rights - ANSWER A multi lender transaction in
which each member of the lending syndicate has a direct contractual relationship with the borrower (Do
NOT get borrower rights)
When can borrower rights be waived? - ANSWER Secondary market and non-qualified lender sales and
loan syndications, and SBA guaranteed loans
All waivers must be done ___ and ____. - ANSWER Voluntarily and in writing
Loan sales to FCA Institution (can/can not) be waivered - ANSWER Can not. Loans made by qualified
lenders and interest in such loans that are sold to other qualified lenders are subject to borrower rights
, Loan designated for sale into a secondary market (are/are not) exempt from borrower rights? - ANSWER
Are. The borrower rights provision of the act exempts loans designated for sale into a secondary market
when designated for sale at the time the loan is made and actually sold within 180 days.
If the loan is not sold into a secondary market during the 180 day period, what happens on the 181st
day? - ANSWER Borrower rights reattach on the 181st day
Loan sales to nonqualified lenders (waiver possible/not possible) - ANSWER Possible. Requires the
purchaser to honor borrower rights unless the borrower waives those rights. Additional disclosures must
be given to the borrower when requesting a waiver of borrower rights
Lenders may use e-commerce for borrower right disclosures except for ___, ___, and ____ - ANSWER
Default, foreclosure, and related adverse actions when the loan is secured by a primary residence
What general loan disclosures must a qualified lender disclose in writing? - ANSWER - Interest rate of the
loan
- EIR of the loan
- Amount of stock or participation certificates that a borrower is required to purchase in connection with
the loan and included in the calculation of the EIR of the loan.
- All loan origination charges included in the EIR
- Statement that stock or participation certificates that borrowers are required to purchase are at risk
and may only be retired at the discretion of the board of the institution
- Various types of loan options available to borrowers with an explanation of the terms and borrower
rights that apply to each type of loan
What is EIR? - ANSWER A measure of the cost of credit expressed as an annual percentage rate that
shows the effect of the following costs on the interest rate (amount of stock or participation certificates
purchased, loan origination charges paid by a borrower to the qualified lender)
When do EIR disclosures apply? - ANSWER Only on loans made by qualified lenders where the loans are
not subject to the Truth in Lending act
For loans with more than one borrower, the lender needs to only provide disclosure to who? - ANSWER
The primary obligor. Borrowers may designate IN WRITING who is to receive the disclosure
