Exam CRCM topic 1 question 276 discussion

Actual exam question from ABA's CRCM

Question #: 276
Topic #: 1

Martin Taylor, a loan officer at First National Bank, is a long-time friend of Bill Evans, a local homebuilder. Bill would like a line of credit at the bank and discusses the potential loan with Martin. During the discussion, Martin expresses his desire to build a house one day and Bill offers to build him one "at cost plus 5 percent."
If Martin accepts Bill's offer, can he continue to act as his loan officer?

A. No. The value of the gift is too great.
B. Yes, if Martin discloses this fact to the bank.
C. Yes, if Martin does not let the discount on the house affect his decision making process.
D. Yes, if the bank's code of conduct allows such activity.

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Suggested Answer: A 🗳️

by Cam22 at March 17, 2024, 3:01 a.m.

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Cam22

4 months ago

Selected Answer: B

If Martin accepts Bill's offer to build him a house "at cost plus 5 percent," he should disclose this fact to the bank. Transparency and disclosure are essential in situations where a potential conflict of interest exists. By disclosing his relationship with Bill and the offer for the discounted house, Martin ensures that the bank can assess any potential conflicts and take appropriate measures to manage them.

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Exam CRCM topic 1 question 276 discussion

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