Reserve Requirements (Reg D) Flashcards
Of the following loans made by a national bank, which loan is NOT covered by the OCC ARM regulation?
A. A loan to purchase a single-family dwelling to be used as a residence, secured by the dwelling with an adjustable interest rate.
B. A loan made to purchase a mobile home to be used as rental property, secured by the home with a variable interest rate.
C. A loan made to purchase an eight-unit apartment complex, secured by the building, made payable on demand with a variable rate of interest.
D. A loan made to purchase a duplex, secured by the dwelling, amortized over 15 years with a 5-year maturity, at a variable rate of interest.
C. A loan made to purchase an eight-unit apartment complex, secured by the building, made payable on demand with a variable rate of interest.
On which of the following adjustable-rate loans must the bank use an index beyond its control?
A. A loan to purchase a home to refurbish and resell for a profit
B. A loan to purchase a vacation home
C. A loan to purchase a duplex where the borrower will live in one of the units
D. A loan to purchase a home to be used as rental property
C. A loan to purchase a duplex where the borrower will live in one of the units
First National Bank is a member of a multibank holding company. The bank makes ARM loans and occasionally purchases ARM loans from its affiliate national and state banks as well as from nonaffiliate banks. All of its own ARMs and well as those it purchases are subject to Regulation Z. Which of the following practices is NOT acceptable under the OCC ARM regulation?
A. The bank purchases loans from its state affiliate banks where the index on the loan is tied to First National’s prime rate.
B. The bank makes loans to purchase single-family dwellings with interest rates that may be adjusted from time to time.
C. The bank links the interest rate indices on its own ARM loans to the national prime rate as published in The Wall Street Journal.
D. The bank requires its national bank affiliates to use the national prime rate as published in The Wall Street Journal as the index for any of the ARM loans it purchases.
A. The bank purchases loans from its state affiliate banks where the index on the loan is tied to First National’s prime rate.
True/False: For loans that are subject to both OCC ARM and Reg Z, the index to which the interest rate is tied to must be:
1. Specified in the loan docs;
2. Readily available to and verifiable by the borrower;
3. Beyond the control of the bank; and
4. A single value of a chosen measure or a moving average of the chosen measure calculated over a specified period.
True
Loans subject to both OCC ARM and Reg Z:
Loans made to an individual for personal purposes, secured by the borrower’s principal dwelling, and have a term longer than 1 year
A compliance professional learns that the bank assesses a penalty of 6 days’ simple interest on withdrawals from CDs made within 7 days of account opening or renewal. What is the BEST way to respond to this issue?
A. Nothing. The penalty assessed is in compliance with Regulation D requirements
B. Change the early withdrawal penalty on all existing and future accounts to 30 days’ simple interest on any withdrawals made within 7 days of account opening or renewal
C. Change the early withdrawal penalty on all existing and future accounts to 7 days’ simple interest on any withdrawals made within 6 days of account opening or renewal
D. Remove the early withdrawal penalty from all CDs, present and past, as such penalties are no longer required under Regulation D
C. Change the early withdrawal penalty on all existing and future accounts to 7 days’ simple interest on any withdrawals made within 6 days of account opening or renewal
Regulation D requires that for time deposits, banks assess a minimum early withdrawal penalty of 7 days’ simple interest on withdrawals made within 6 days of account opening or renewal. Anything in excess of this minimum penalty is at the discretion of the bank.
