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Exam CRCM topic 1 question 98 discussion

Actual exam question from ABA's CRCM
Question #: 98
Topic #: 1
[All CRCM Questions]

ABC National Bank regularly purchases mortgage loans from ACME Mortgage Company, a local mortgage broker. ACME places a mandatory arbitration clause in each of its mortgage documents. ACME believes this clause is necessary because of state laws governing arbitration. Is this clause a problem for ABC National?

  • A. No, unless other predatory or abusive lending practices are evident in the loans sold by ACME.
  • B. Yes, the clause is a sign of an abusive lender, and the bank should not purchase the loans.
  • C. Yes, the bank should make ACME strike the clause from future loans.
  • D. No, this is a common practice and the bank can ignore it.
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Suggested Answer: A 🗳️
by Cam22 at March 15, 2024, 3:14 a.m.

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Cam22
4 months ago
Selected Answer: A
he presence of a mandatory arbitration clause alone is not necessarily a problem for ABC National Bank. However, if there are other predatory or abusive lending practices evident in the loans sold by ACME Mortgage Company, then ABC National Bank should be concerned. Otherwise, the arbitration clause may simply be a standard part of the mortgage documents influenced by state laws governing arbitration.
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