Which of the following activities most significantly increases the risk that a bank will make poor-quality loans to its customers?
A) Borrowers may not sign all required mortgage loan documentation.
B) Fees paid by the borrower at the time of the loan may not be deposited in a timely manner.
C) The bank's loan documentation may not meet the government's disclosure requirements.
D) Loan officers may override the lending criteria established by senior management.

Question

Quizplus · Accepted Answer

When loan officers override established lending criteria, it increases the risk of poor-quality loans because it bypasses the risk assessment and controls designed to ensure that loans are made to creditworthy borrowers.

Which of the Following Activities Most Significantly Increases the Risk