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Exam CRCM topic 1 question 101 discussion

Actual exam question from ABA's CRCM
Question #: 101
Topic #: 1
[All CRCM Questions]

According to the 2007 interagency statement on subprime mortgage lending, what should an institution offering mortgage loans to subprime borrowers provide before submission of an application?

  • A. Information on local residential real property values
  • B. Payment shock information
  • C. Truth in Lending disclosures
  • D. Initial escrow statements
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Suggested Answer: B 🗳️

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Cam22
4 months ago
Selected Answer: B
Payment shock information. According to the 2007 interagency statement on subprime mortgage lending, institutions offering mortgage loans to subprime borrowers are specifically advised to provide information on potential payment shock. Payment shock is a term used to describe the risk that borrowers face when adjustable-rate mortgages reset to higher interest rates, significantly increasing their monthly mortgage payments. The statement emphasizes the importance of ensuring that borrowers are fully informed about the risks and consequences of their loan options, including the possibility of substantial increases in their future mortgage payments.
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