Post Test for Consumer Lending Training

 

Consumer Lending Authority

 

Post Test

The following test will be in written format.  The consumer lending test is the final phase of this training.  The test is divided into four sections, composed of multiple choice, true and false, case study questions and one essay.  You must complete this test with a score of 85% in order to demonstrate the needed competencies to qualify for your lending Authority. 

Test Breakdown:

11 Multiple choice = 3 points each

14 True and False= 3 points each

7 Case study questions = 3 points each

1 essay = 4 points each

Total of 100 points

 

 

 

 

 

 

 

Consumer Lending Training: Post Test

Please answer the following multiple choice questions. (3 points each)

 

  1. When approving a consumer loan, what is the minimum score that is acceptable with out having an override by the loan committee?
    1. 650
    2. 655
    3. 660
    4. 700
    5. 710
    6. None of the above
  2. What are the Five C’s of Credit
    1. Capacity, Character, conditions, Collateral, Capital
    2. Capacity, Character, Conditions, Collateral, Cash
    3. Cosigner, Character, Conditions, Cash, collateral
    4. Consumer, Character, Cosigner, Cash Conditions
    5. None of the above
  3. What is an example of revolving debt
    1. Home Mortgage
    2. Auto loan
    3. Credit Card
    4. Student loan
    5. None of the above
  4. How is Debt to Income Calculated
    1. Total recurring gross income divided by total monthly obligations
    2. Total monthly obligations divided by total recurring gross income
    3. Total monthly obligations subtracted from income
    4. Total annual income divided by two
    5. Total monthly obligations dived by National Gross product
    6. None of the above     
  5. What is not calculated in Debt to income
    1. Utility Payment
    2. Phone Payment
    3. Insurance Payment
    4. Medical Payment
    5. All of the above
    6. None of the above
  6. Based upon credit policy what is maximum debt to income ratio for income of $40,00 and lower
    1. 25%
    2. 33%
    3. 36%
    4. 40%

 

  1. If Mary Makes $50,00 a year and has a total of $1600 of monthly obligations, what is Mary’s Debt to Income ratio
    1. 38%
    2. 20%
    3. 15.7%
    4. 43%
    5. 28%
    6. 37%
  2. What does chapter 7 Bankruptcy mean?
    1. Wage Earner plan ( individual is given plan by court to pay part of the debt)
    2. Individual Bankruptcy
    3. Business Bankruptcy
    4. The 7th Bankruptcy by the consumer
    5. Bankruptcy finalized in the 7th month (July)
  3. What is Equifax?
    1. Telephone company
    2. Railway Company
    3. Credit Bureau agency
    4. A loan product
    5. A town in Virginia
    6. None of  the above
  4. On the credit report what does the ones (111111) mean in the history section?
    1. 30 days past due
    2. 1 day past due
    3. Paid as agreed
    4. 60 days past due
    5. 90 days past due
    6. None of the above
  5. What are trade lines?
    1. Hotel in South Florida
    2. The number of inquires on a credit report
    3. The number of current and past credit products that is on record
    4. The number of current products on record
    5. The number of past products on record

 

True or False:  Please mark whether the following are True (T) or False (F) 3 points each

 

12.  ___           All loans regardless of credit score and quality must be reviewed by the credit committee.

 

13. ___            New car loans do not need to have a perfected lien on the note.

 

14. ___            The bank may face fines or penalties if the appropriate regulatory disclosures are not completed.

15. ___            The loan committee can override an auto loan with just liability.

 

16. ___            A loan can be turned down solely on the relationship the customer has with the institution.

 

17. ___            If the financial institution is lending money to all economic classes it is up to the instructions on whether it will participate in the Community Reinvestment Act known as CRA.

 

18. ___            Loan to value is calculated by using the loan amount divided by the value of the product. IE automobile, boat, house.

 

19. ___            Liens against rental property puts the bank in a lower risk exposure bracket, since the customer makes money off the rental property.

 

20. ___            Trade lines listed on the credit report our the amount of times that a consumer has applied for credit.

 

21. ___            A collection items is considered to be a minor derogatory.

 

22. ___            Employment verification is always needed for the loan file.

 

23. ___            If the loan application is being declined the lender has 3 days to mail the customer the loan decision.

 

24. ___            Income such as social security and pensions are not taxed and must be grossed up when calculating income.

 

25. ___            When grossing up non taxable income, the proper method of grossing up income is to divided the net amount by .82.

 

 

You have now finished the general knowledge portion of the lending post test.  It is now tine to utilize your classroom training to analyze the following  case study.  Based on the facts in the case study answer the following questions

 

Case Study:    (3 points each)

Matthew Simpson graduated in May 2004 from Kansas State University and started his first professional job in June with Sprint PCS in Kansas City. Matthew graduated with a GPA of 3.7 and was able to land a job in the accounting department as a project coordinator.  In this position he will learn various job functions of accounting and finance.  Matthew comes to your institution because he wants to buy a 2002 Ford Explored for $15,000 The NADA Value of this car with 35,000 Miles is $17,356  Matthews annual salary will be $35,00.  Matthew lives in an apartment and pays $630 a month.  After you review his credit report you know the following facts.

   Matthew has a capital one credit card with a balance of $1500 he pays $60 a month and has a credit limit of $4000

   Matthew had a previous car note for $7800.00 that he had his dad co-sign on. This was paid off in March of 2004

   Mathew has one student loan for $10,000, his monthly payment is $165.00

   Matthew has been in the credit bureau since 2000 when he bought his first car

   Matthew was late 1 time 30 days on his Credit Card

   3 trade lines…  Previous auto loan, current credit card, current student Installment loan

   Credit score of 680

   One Minor derogatory

 

Other Known facts

   Matthew has a checking account at a different bank with an average balance of $234

   If approved the Explorer payment will be $295 a month for 60 months based upon the standard rate of 6.54%

 

Answer the following questions:

26.    What is Matthews Debt to income?

 

27.    What is the Loan to Value on the Explorer

 

28.    How long has Matthew been using credit?

 

29.    Does Matthew’s credit need seem appropriate  for his  lifestyle?

 

30.    What is Matthew Primary Source of Income?

 

31.    Would you approve this loan?

 

32.     Explain Why or why Not… Use supporting legal documentation for your answer Example: High debt to income, insufficient credit obligations.

 

Essay Question (4 points each)

 

33.    Describe A loan situation that would be acceptable to approve with exceptions?