A California-chartered bank receives a 'Needs to Improve' CRA rating from its federal regulator. The bank subsequently files an application to open a new branch. What is the most likely regulatory consequence of the bank's CRA rating on that application?
Correct Answer
D) Federal regulators may deny the application or impose conditions, because CRA performance is a required factor in reviewing applications for new deposit facilities
Under the Community Reinvestment Act (12 U.S.C. §2903), federal regulators are required to consider a bank's CRA performance record when evaluating applications for new branches, deposit facilities, mergers, and acquisitions. A 'Needs to Improve' rating does not trigger an automatic denial but gives regulators grounds to deny the application or attach conditions requiring the bank to improve its community lending record.
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Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
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