Preview Questions Loan Officer | Role Specific Skill

Question 1: In loan documentation, what is required to confirm that the loan terms are in line with the Truth in Lending Act (TILA) regulations?

Which action should you take?

Choose only one option

A closing disclosure form showing all charges related to the loan

A loan application form that includes the details of the loan's terms

A Truth in Lending disclosure that outlines the loan's APR, payment schedule, and total cost

A credit report confirming the borrower's financial status

Question 2: In the case of a refinancing consultation, what would be the first question a Loan Officer should ask a client?

Which action should you take?

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If the client prefers to switch from fixed-rate to variable-rate loans

Whether the client's current interest rate and loan terms are favorable compared to market rates

Whether the client is planning to increase or decrease loan amount

Whether the client is considering a cash-out refinance option

Question 3: When evaluating a borrower's financial history, which metric is most predictive of default risk in a small business loan application?

Which action should you take?

Choose only one option

The business's profitability over the last two years, ensuring the ability to generate enough cash flow

The inventory turnover rate, indicating how quickly goods are sold and the business's operational efficiency

The business's credit utilization ratio can predict financial strain

The personal credit score of the business owner is the most reliable indicator

Question 4: What action must a loan officer take under the Bank Secrecy Act (BSA) when a loan transaction is suspected of money laundering?

Which action should you take?

Choose only one option

Increase the loan's interest rate

Report the transaction to the appropriate authorities

Close the loan without informing the borrower

Suspend the loan process until the client provides further documents

Question 5: What is the impact of a recent bankruptcy on a client's creditworthiness?

Which action should you take?

Choose only one option

A recent bankruptcy significantly lowers credit scores and suggests a higher risk of default

It has no impact as long as the client has repaid some loans

It helps the client qualify for higher loan amounts

It automatically disqualifies the client from any loan offers

Question 6: During the loan approval process, what does the term "creditworthiness" refer to?

Which action should you take?

Choose only one option

The borrower's income potential

The borrower's collateral value

The borrower's ability to repay the loan based on their financial stability and credit history

The borrower's job stability