Page | 1
UCE Practice Questions 1 Questions
with Detailed Verified Answers
Question:How does a bank ensure that it has perfected its lien on real estate
held as collateral?
A. perform a Uniform Commercial Code (UCC) search
B. verify lien status with the tax assessor
C. obtain a list of prior lien holders from the borrower
D. perform a title search after the deed of trust or mortgage is filed
E. obtain a preliminary title opinion prior to filing the lien
Ans: D. perform a title search after the deed of trust or mortgage is filed
A security interest in the collateral that is used to secure the performance of a
debt that is protected from third-party claims. A perfected lien for real
property must be filed with the correct legal authority. Perfected liens for real
estate are achieved when the mortgage deed of trust is recorded in the land
records of the appropriate municipality.
To ensure the lien is perfected, you must test it after you file the deed of trust.
, Page | 2
Question: Which three loans are required to be on nonaccrual? (Choose
three.)
A. A residential real estate loan is 95 days past due, but the borrower has been
making timely monthly payments for five months.
B. A commercial loan with a loan-to-value of 50% is past due 119 days. The
borrower has just filed for chapter 11 bankruptcy protection and repayment is
uncertain.
C. An unsecured commercial loan is 87 days past due and the bank anticipates
payment from an insurance settlement within 30 days.
D. A commercial loan is 85 days past due. Collateral is sufficient to cover the
loan's principal balance, but the bank expects to charge-off $3,000 in interest
and $400 in accrued late charges.
E. A $20,0000 single-payment commercial note secured by machinery and
equipment has renewed annually for the last ten years with no principal
reduction. The loan is current, but the entire credit relationship is rated
substandard.
, Page | 3
Ans: B. A commercial loan with a loan-to-value of 50% is past due 119 days.
The borrower has just filed for chapter 11 bankruptcy protection and
repayment is uncertain.
D. A commercial loan is 85 days past due. Collateral is sufficient to cover the
loan's principal balance, but the bank expects to charge-off $3,000 in interest
and $400 in accrued late charges.
E. A $20,0000 single-payment commercial note secured by machinery and
equipment has renewed annually for the last ten years with no principal
reduction. The loan is current, but the entire credit relationship is rated
substandard.
Question: Which three reports should a bank use to monitor loans to finance a
residential construction project? (Choose three.)
A. rent roll
B. Inspection
C. progress report
D. general economic conditions
E. borrower's financial condition
, Page | 4
Ans: B. Inspection
C. progress report
E. borrower's financial condition
Question: Policy and underwriting exceptions are conditions in approved
loans that violate the bank's loan policy or underwriting practices.
Which statement is true regarding the OCC's view of exceptions?
A. Loans with underwriting exceptions indicate unacceptable risk to the bank.
B. Management may not violate the bank's loan policy if the loan amount is
greater than $50,000.
C. Management may violate the bank's loan policy as long as the loan amount
is less than 5% of capital.
D. Management may violate the bank's loan policy as long as they document,
justify, and track the exception.
E. Loans with underwriting exceptions indicate well-defined weaknesses,
indicating that the loan should be criticized.
UCE Practice Questions 1 Questions
with Detailed Verified Answers
Question:How does a bank ensure that it has perfected its lien on real estate
held as collateral?
A. perform a Uniform Commercial Code (UCC) search
B. verify lien status with the tax assessor
C. obtain a list of prior lien holders from the borrower
D. perform a title search after the deed of trust or mortgage is filed
E. obtain a preliminary title opinion prior to filing the lien
Ans: D. perform a title search after the deed of trust or mortgage is filed
A security interest in the collateral that is used to secure the performance of a
debt that is protected from third-party claims. A perfected lien for real
property must be filed with the correct legal authority. Perfected liens for real
estate are achieved when the mortgage deed of trust is recorded in the land
records of the appropriate municipality.
To ensure the lien is perfected, you must test it after you file the deed of trust.
, Page | 2
Question: Which three loans are required to be on nonaccrual? (Choose
three.)
A. A residential real estate loan is 95 days past due, but the borrower has been
making timely monthly payments for five months.
B. A commercial loan with a loan-to-value of 50% is past due 119 days. The
borrower has just filed for chapter 11 bankruptcy protection and repayment is
uncertain.
C. An unsecured commercial loan is 87 days past due and the bank anticipates
payment from an insurance settlement within 30 days.
D. A commercial loan is 85 days past due. Collateral is sufficient to cover the
loan's principal balance, but the bank expects to charge-off $3,000 in interest
and $400 in accrued late charges.
E. A $20,0000 single-payment commercial note secured by machinery and
equipment has renewed annually for the last ten years with no principal
reduction. The loan is current, but the entire credit relationship is rated
substandard.
, Page | 3
Ans: B. A commercial loan with a loan-to-value of 50% is past due 119 days.
The borrower has just filed for chapter 11 bankruptcy protection and
repayment is uncertain.
D. A commercial loan is 85 days past due. Collateral is sufficient to cover the
loan's principal balance, but the bank expects to charge-off $3,000 in interest
and $400 in accrued late charges.
E. A $20,0000 single-payment commercial note secured by machinery and
equipment has renewed annually for the last ten years with no principal
reduction. The loan is current, but the entire credit relationship is rated
substandard.
Question: Which three reports should a bank use to monitor loans to finance a
residential construction project? (Choose three.)
A. rent roll
B. Inspection
C. progress report
D. general economic conditions
E. borrower's financial condition
, Page | 4
Ans: B. Inspection
C. progress report
E. borrower's financial condition
Question: Policy and underwriting exceptions are conditions in approved
loans that violate the bank's loan policy or underwriting practices.
Which statement is true regarding the OCC's view of exceptions?
A. Loans with underwriting exceptions indicate unacceptable risk to the bank.
B. Management may not violate the bank's loan policy if the loan amount is
greater than $50,000.
C. Management may violate the bank's loan policy as long as the loan amount
is less than 5% of capital.
D. Management may violate the bank's loan policy as long as they document,
justify, and track the exception.
E. Loans with underwriting exceptions indicate well-defined weaknesses,
indicating that the loan should be criticized.
