Download NCCO EXAM STUDY GUIDE ACTUAL EXAM QUESTIONS WITH VERIFIED SOLUTIONS BRAND NEW! and more Exams Economics in PDF only on Docsity!
NCCO EXAM STUDY GUIDE
ACTUAL EXAM QUESTIONS
WITH VERIFIED SOLUTIONS
BRAND NEW!
"Does the CFPB have examination authority over all credit unions? What determines whether CFPB has supervisory and examination authority over a credit union? - CORRECT ANSWER=> Only CU's with more then $10 billion in assets. CU's with $10 billion or less in assets are examined and supervised by NCUA and, for state-chartered CU's, their state regulator. The CFPB's examination and supervision powers are generally limited to the consumer laws and regulations under its authority. NCUA will continue to examine all credit unions for safety and soundness. Dodd-Frank" "Are credit unions subject to the CFPB's Regulation DD? - CORRECT ANSWER=> The language of the CFPB's Regulations DD is clear that it does not cover credit unions, stating it "applies to depository institutions except for credit unions."" "How do the CFPB's authority and objectives impact credit unions? - CORRECT ANSWER=> The transfer of authority to the CFPB means that all credit unions need to comply with the bureau's regulations. This requirement applies regardless of the size of the credit union. A credit union with $15 million in assets is required to follow Regulation Z as well as a credit union with $ million in assets." "How does the NCUA's examination program differ from an audit? - CORRECT ANSWER=> Program conducts risk focused examinations to determine area of risk to the CU's operational and financial health. Audit will asses how a CU is operating to date; a financial audit verifies the CU financial statements."
"What are the seven types of risk that NCUA examines for? - CORRECT ANSWER=> Credit Risk, Liquidity Risk, Interest Rate Risk, Transaction Risk, Compliance Risk, Strategic Risk, Reputation Risk." "What are the various administrative tools available to NCUA, when may they be utilized, and what is the severity of each? - CORRECT ANSWER=> Examiner's findings Document of Resolution Letters of Understanding and Agreement Cease and Desist Order Others: Civil Money Penalty, Prohibition Orders, Removal of Officer(s)" "What are the six components that make up the CAMELS system? - CORRECT ANSWER=> Capital Adequacy Asset Quality Management Earnings Liquidity and Asset Liability Management" "In what format can credit unions file quarterly call reports and profile data with NCUA? - CORRECT ANSWER=> Electronically using the NCUA's information management system or other electronic means specified by the agency." "What is the difference between the NCUA and CFPB authority when it comes to examining credit unions? - CORRECT ANSWER=> NCUA - all federally insured CU's and the CFPB is empowered to examine federally insured CUs with assets greater than $10 billion and their affiliates." "What are the benefits of the credit union membership? - CORRECT ANSWER=> Members own the credit union, members exercise democratic control of the CU, right to vote - each member has equal voting power: one share, one vote, Right to inspect - Members have right to inspect bylaws and charter and upon petition, members may inspect CU books and records, including board minute and accounting records." "Can credit unions provide health insurance to directors during their time on the board? - CORRECT ANSWER=> Credit Unions may provide directors with reasonable health insurance." "What is the basic structure of a federal credit union's board of directors? How often must they meet? - CORRECT ANSWER=> May consist of an odd number between 5 and 15, composition should reflect the CU's membership, term are for two or three years. Positions - Chair, One or more Vice Chairs, Financial Officer and Secretary. They should meet at least once a month. At least one in person, regular meeting each year must be held in person." "What are the main responsibilities of the Supervisory Committee? - CORRECT ANSWER=> The committee should review the performance of the FCU, its officials and employees, and make
"How do NCUA's lending regulations interact with state law? - CORRECT ANSWER=> They preempt (override) state law" "Understanding the types of state laws that are preempted by NCUA's regulations. State laws that cap which types of fees would be preempted? - CORRECT ANSWER=> Lending - Rates, Terms of repayment and conditions of FCU Loan, Late fees, Closing and origination fees. State law inconsistent - then FCU doesn't have to comply" "What is the difference between a nonparticipation policy and a limitation of services policy? What are the requirements of each? Which one can be used again a member who has caused the credit union a loss? - CORRECT ANSWER=> Nonparticipation policy - is defined in the FCU Act as a member's failure to vote in elections or failure to purchase shares, obtain a loan, or lend to the FCU. Requirement- it must provide notice to the membership within 30 days of the effective date of the policy, once adopted, the policy may be enforced to expel members that do not participate in the CU. Limitation of Services - establishes certain behaviors exhibited by members that will lead to a limitation of certain services. The policy must be established by the board, in writing and communicated to the membership. Limitation of services can be used if a member has caused the cu a loss." "How does a credit union impress it statutory lien? - CORRECT ANSWER=> There are 3 ways - Give notice with account opening documents, give notice with loan documents that are signed, and pass a bylaw amendment or policy and provide notice." "How does a credit union enforce its statutory lien? How is this different for credit cards? - CORRECT ANSWER=> The lien can only be enforced when a member is in default on an outstanding financial obligation that is due and payable. It is different for credit cards you can not offset a credit card account with members funds." "Review the express and incidental powers credit unions have. Be prepared to know what types of activities fall under each preapproved incidental power. - CORRECT ANSWER=> Express Powers
- expressly authorized by the FCU Incidental Powers - Non-expressed powers in the FCU Act, but needed to support activities permitted by the FCU Act." "What is the three-prong test for incidental powers? - CORRECT ANSWER=> Convenient or useful in carrying out the mission or business of FCUs under the FCU Act Functional equivalent or logical outgrowth of activities that are part of the FCU's mission or business Risks similar in nature to those already assumed as part of the business of credit unions"
"What is the process for expelling a member, including the special meeting and voting processes? - CORRECT ANSWER=> Special Meeting - Rules are calling a special meeting are in the bylaws. At the meeting, no other business may be conducted and the individual must have an opportunity to be heard. Two-thirds of members present must vote to expel the member. Nonparticipation Policy - a policy must be adopted by the board. Notice must be given within 30 days of its effective date. Nonparticipation is failure to vote in elections or purchase shares, obtain a loan or lend to the FCU. Open adopted, members who do not participate may be expelled without a special meeting." "What are the two fundamental rights for the credit union members? - CORRECT ANSWER=> 1. Right to Vote
- The right to maintain a share account" "Can a nonmember be a co-borrower? Guarantor? Cosigner? - CORRECT ANSWER=> Cannot be a co-borrower but they can be a guarantor and cosigner" "Where is the best place to look for the credit union's field of membership? - CORRECT ANSWER=> Chapter 5 of their bylaws will list the distinct field of membership" "How can a business or organizations qualify for membership? - CORRECT ANSWER=> Organizations of such persons a group which is 100% comprised of individuals who fall within the field of membership. It is located in the FOM's geographic boundaries for a community charter It is specifically listed in the FCU's charter The charter includes the phrase" organizations of such persons" and the organizations is made entirely of person with the FOM" "What does the "once a member, always a member" credo mean? - CORRECT ANSWER=> FCU's operate under the policy "once a member, always a member" such a policy provides that even if a person exits the field of membership, they may continue as a member until their membership is voluntarily terminated or they are expelled from membership." "What may a federal credit union accept nonmember deposits? - CORRECT ANSWER=> When those nonmembers are public units (such as a state or county), political subdivisions thereof (such as school districts or port authorities) and nonmember credit unions. Credit Unions with a "low income credit union" designation may accept nonmember deposits with fewer restrictions."
restructure the account to ensure continued share insurance coverage. However the grace period does not extend to the death of a beneficiary on a revocable trust account. In those situations, the share insurance coverage could be reduced." "How is share insurance coverage determined for a revocable trust? A joint revocable trust? Complex revocable trusts will not be tested. - CORRECT ANSWER=> It is based off owners and beneficiaries. If a single owner has 3 beneficiaries coverage is $750,000 but if there are two owners and 1 beneficiary coverage is only $500,000 not $750,000" "If a member has an IRA and a Roth IRA at your credit union, is the member's insurance coverage a combined $250,000 or $250,000 for each account ($500,000 total)? - CORRECT ANSWER=> A combined $250,000" "What are the share insurance coverage rules for business accounts? - CORRECT ANSWER=> $250,000 applies for corporations, partnerships, and unincorporated associations. Sole Proprietorships and DBA's are aggregated under the individual account coverage limit." "How is share insurance coverage determined in the event of a merger? How long is the grace period? - CORRECT ANSWER=> The accounts are eligible for separate coverage up $250,000 for a period of 6 months post merger. After 6 months, coverage is provided under the acquiring institution." "What are the various maturity limitations found in the NCUA's lending requirements? - CORRECT ANSWER=> 40 years, 20 years, 15 years - They do not apply to Line of Credits - Credit Card of Heloc 15 years - General limit that applies if it not eligible for 20 or 40 year limit. 20 years - First lien on a mobile home use as a member's residence, 2nd mortgage/nonpurchase money first mortgage secured by residential dwelling used a member's residence, repair/improvement of member's residence 40 years - residential real estate loan, Perfected first lien on a 1-4 family dwelling that is or will be the principal residence of the member. Standards loan application form or equivalent, standard/uniform security instrument and note." "Do NCUA's lending requirements address loan incentive programs? If so, what are the limitations of such programs? - CORRECT ANSWER=> Yes they do. No FCU official (Member of the board or volunteer committee) or employee (or even the immediate family member of an official or employee), may receive commission, fee or other compensation in connection with any loan made by the CU"
"Must FCU staff, management and officials receive the same loan rates, terms and conditions as all other members? Can FCUs offer preferential loan terms to employee's like the COO? - CORRECT ANSWER=> Yes the COO is an employee not an official. Officials can not receive preferential loan terms." "Describe how the federal credit unions may interact with nonmembers in the lending context. - CORRECT ANSWER=> Nonmembers can be the guarantor, cosigner and authorized users on loans." "What is a member business loan? Are there exceptions to the definition? What kinds of loans are there exceptions for in the definition? - CORRECT ANSWER=> MBL is any commercial loan. Except - (example - these are commercials loans not MBL's. Loans fully insured or guaranteed by a federal or state agency. Loans to non members or participation interest in loans to non- members." "What are the "concentration limits" in NCUA's lending rules? - CORRECT ANSWER=> 10% concentration limit - unimpaired capital and surplus. No loan or loc advance may be made to any member if the loan or advance would cause the member to owe the FCU an aggregate amount exceeding 10% of the credit unions total unimpaired capital and surplus" "How do the NCUA lending regulations limit loans and loan-related compensation to a credit union's board of directors and other officials? When is board approval required for loans made to the credit union officials? - CORRECT ANSWER=> Board approval is required when an official is a direct obligor, endorser, cosigner or guarantor if: A-B= $20,000A is the sum of: Amount of Application, outstanding balances of loans, including the used portion of an approved loc extended or endorsed, cosigned or guaranteed by the official, total unused portion of approved LOC extended to or endorsed, cosigned or guaranteed by the official. B is the sum of: The amount of shares pledged by the official on loans or lines of credits extended to or endorsed, cosigned or guaranteed by official, the amount of shares to be pledged by the official on the loan or loc applied for by the official" "What is considered an official under NCUA's rule? - CORRECT ANSWER=> Official is a member of the board of directors, supervisory committee or credit committee" "What measures must a credit union take when making loans to credit union officials (directors, supervisory committee member, etc.)? - CORRECT ANSWER=> Loans to officials in excess of $20,000 are subject to board review."
"How many regional offices does NCAU have? What are their duties? - CORRECT ANSWER=> The NCUA has 3 regional offices. Each office is responsible for oversight, examination and supervision of the federally insured credit union in its geographical region." "How does the National Credit Union Share Insurance Fund (NCUSIF) remain funded? - CORRECT ANSWER=> By the participating federally insured credit unions." "What are the different Offices (e.g., Office of Consumer Financial Protection, Office of Credit Union Resources and Expansion, etc.) within NCUA and what do they do or when would a credit union need to reach out to one of those Offices? - CORRECT ANSWER=> Office of Consumer Financial Protection - NCUA's heighten focus on consumer protection. CURE - is to support credit union growth and development, offering assistance to any credit union in the following areas: chartering; charter conversions; bylaw amendments; field of membership expansion requests; and low-income designations"
