Preview Questions Loan Officer | Role Specific Skill

Question 1: Which ratio is most important for evaluating a borrower's ability to meet both current and future debt obligations?

Which action should you take?

Choose only one option

Loan-to-asset ratio (LAR)

Credit utilization rate

Loan-to-value ratio (LTV)

Debt-to-income ratio (DTI)

Question 2: Which of the following is NOT a requirement of the Bank Secrecy Act (BSA)?

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Institutions must establish an anti-money laundering (AML) program

Financial institutions must disclose customer account details

Financial institutions must report suspicious activity

Institutions must file Currency Transaction Reports (CTRs)

Question 3: How does a credit-builder loan function, and who is it best suited for?

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A credit-builder loan allows a borrower to build credit by making regular payments toward a loan with the balance held in a savings account

A credit-builder loan requires a co-signer for approval

A credit-builder loan is for borrowers with excellent credit looking for lower rates

A credit-builder loan is an unsecured loan with no collateral requirement

Question 4: Under the Fair Credit Reporting Act (FCRA), how long can a negative credit report impact a borrower's credit score?

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7 years

10 years

3 years

5 years

Question 5: In a secured loan, which of the following is most critical in determining the loan-to-value ratio (LTV)?

Which action should you take?

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The borrower's credit score, as it indicates risk relative to the loan size

The borrower's income to ensure they can meet repayment terms

The appraised value of the collateral relative to the loan amount

The interest rate of the loan, which affects the borrower's repayment obligations

Question 6: When evaluating a loan application, why is it crucial to assess the borrower's collateral?

Which action should you take?

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To verify the borrower's employment status

To calculate the loan approval amount

To reduce the lender's exposure to risk in case of loan default

To determine the loan interest rate