The OCC recommends all but one of the following actions to help prevent a national bank's purchasing or acquiring predatory or abusive loans. Which practice is
NOT recommended?
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A. B. C. D.D
The OCC (Office of the Comptroller of the Currency) is a regulatory agency that supervises and regulates national banks in the United States. One of their concerns is preventing national banks from purchasing or acquiring predatory or abusive loans.
To prevent this from happening, the OCC recommends several practices that national banks can implement. These practices include:
A. Establish policies on the bank's relationship with third-party brokers and originators: National banks should establish clear policies and procedures for their interactions with third-party brokers and originators. These policies should outline the bank's expectations for fair lending practices and should require brokers and originators to adhere to these standards.
B. Review loan documentation: National banks should review all loan documentation carefully before purchasing or acquiring a loan. This review should include an examination of the borrower's financial situation and an assessment of the loan's terms and conditions.
C. Audit the third-party broker: National banks should conduct regular audits of their third-party brokers and originators. These audits should ensure that brokers and originators are complying with the bank's policies and procedures and that they are not engaging in any predatory or abusive lending practices.
D. Require the broker to establish a reserve account for legal contingencies: This practice is not recommended by the OCC. Requiring brokers to establish a reserve account for legal contingencies could create a disincentive for brokers to comply with fair lending practices. Brokers may see the reserve account as a way to offset potential legal costs if they engage in predatory or abusive lending practices.
In summary, the OCC recommends that national banks establish policies on their relationships with third-party brokers and originators, review loan documentation carefully, and conduct regular audits of their third-party brokers and originators to prevent the purchasing or acquiring of predatory or abusive loans. However, requiring brokers to establish a reserve account for legal contingencies is not recommended.