Exam CRCM topic 1 question 88 discussion

Actual exam question from ABA's CRCM

Question #: 88
Topic #: 1

A bank's president would like to begin offering a new home equity line of credit product within two weeks. In all cases the borrower's principal dwelling will secure the loan. The president has already launched a planned advertising campaign for the bank's major service markets. What should the compliance professional do
FIRST?

A. Hire an attorney to write the appropriate legal documents and disclosures
B. Write a memo to the president explaining why the compliance professional should have been in on the process at an earlier date
C. Begin training sessions for the lending and loan operations staff on the compliance issues involved
D. Perform a risk assessment to determine the bank's level of risk in offering this new product

Show Suggested Answer

Suggested Answer: D 🗳️

by Cam22 at March 15, 2024, 2:55 a.m.

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Dex24

6 months, 3 weeks ago

D, page 16.

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Cam22

8 months, 3 weeks ago

Selected Answer: D

For the compliance professional facing the situation of a new home equity line of credit product being launched imminently, the first step should prioritize identifying potential compliance and regulatory risks associated with offering the new product. This proactive approach is crucial for ensuring that the product aligns with relevant laws and regulations, thus safeguarding the bank against potential legal, financial, and reputational damages. Option D, "Perform a risk assessment to determine the bank's level of risk in offering this new product," is the correct first action. A risk assessment will help identify compliance issues, regulatory requirements, and any other potential risks associated with the new product. Understanding these risks is foundational for guiding the development of legal documents, disclosures, and training programs. It also positions the compliance professional to advise the bank's leadership effectively on how to mitigate these risks.

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