The purpose of guidelines for National Banks to Guard against Predatory and Abusive Lending Practices- AL-2003-2 includes all of the following EXCEPT:
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A. B. C. D.C
The purpose of the guidelines for National Banks to Guard against Predatory and Abusive Lending Practices- AL-2003-2 is to provide guidance to national banks on how to avoid engaging in lending practices that may be considered predatory or abusive. The guidance is intended to help banks avoid legal and reputational risks associated with such practices and promote fair and transparent lending practices.
Option A states that the guidelines provide examples of practices that may be abusive. This is a correct statement. The guidelines do provide examples of practices that may be considered predatory or abusive, such as loan flipping, equity stripping, and balloon payments.
Option B states that the guidelines advise banks on how to avoid abusive practices. This is also a correct statement. The guidelines provide specific guidance on how banks can avoid engaging in abusive practices, such as by conducting thorough underwriting, ensuring that loans are affordable for borrowers, and avoiding practices that may result in loan defaults or foreclosures.
Option C states that banks should consider appropriate discount rates, credit loss rates, and prepayment rates when valuing these assets. This statement is not directly related to the purpose of the guidelines for National Banks to Guard against Predatory and Abusive Lending Practices. While banks should certainly consider appropriate valuation metrics when assessing their loan portfolios, this statement does not relate specifically to predatory or abusive lending practices.
Option D states that the guidelines show how some abusive lending can involve unfair or deceptive practices and therefore violate the Federal Trade Commission Act. This is also a correct statement. The guidelines explain that some practices that may be considered predatory or abusive, such as misrepresenting loan terms or charging excessive fees, may also be considered unfair or deceptive under the Federal Trade Commission Act.
In summary, the purpose of the guidelines for National Banks to Guard against Predatory and Abusive Lending Practices- AL-2003-2 is to provide guidance to national banks on how to avoid engaging in lending practices that may be considered predatory or abusive. The guidelines provide examples of such practices, advise banks on how to avoid them, and explain how some practices may violate the Federal Trade Commission Act.