Credit Law and Regulations Flashcards
7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Credit Law and Regulations flashcards as text
A mechanic's lien differs from a UCC Article 9 security interest primarily because it:
Answer: Arises by statute without a security agreement and attaches to real property
A mechanic's lien arises by statute when labor or materials are provided and typically attaches to real property without requiring a separate security agreement.
Under the Dodd-Frank Wall Street Reform Act, which provision most directly impacts commercial credit risk assessment?
Answer: Enhanced requirements for risk retention in securitized credit
Dodd-Frank's risk retention rules require securitizers to keep a portion of credit risk, aligning their interests with investors and improving underwriting standards.
When a guaranty is described as 'unconditional,' it means the guarantor:
Answer: Is liable immediately upon the primary debtor's default without requiring the creditor to exhaust remedies
An unconditional (or absolute) guaranty makes the guarantor immediately liable upon default without requiring the creditor to first pursue the primary debtor.
The 'statute of frauds' as applied to credit agreements generally requires which types of agreements to be in writing?
Answer: Agreements to answer for the debt of another and contracts not performable within one year
The statute of frauds requires guaranties (promises to answer for another's debt) and contracts not performable within one year to be in writing to be enforceable.
An 'ipso facto' clause in a credit agreement that accelerates debt upon a customer's bankruptcy filing is:
Answer: Generally unenforceable because the Bankruptcy Code prohibits such provisions
The Bankruptcy Code under § 365(e) generally renders ipso facto clauses unenforceable, preventing automatic acceleration or termination based solely on a bankruptcy filing.
Which doctrine holds that a creditor who takes an assignment of an account receivable takes it subject to all defenses the account debtor had against the original seller?
Answer: The 'takes subject to defenses' rule under UCC § 9-404
Under UCC § 9-404, an assignee of an account receivable generally takes subject to all claims and defenses that could be asserted against the assignor by the account debtor.
What is the primary purpose of the Uniform Fraudulent Transfer Act (UFTA) from a creditor's perspective?
Answer: To allow creditors to set aside transfers made by debtors to hinder, delay, or defraud them
The UFTA (now largely replaced by the Uniform Voidable Transactions Act) allows creditors to void transfers made by debtors with intent to defraud or for less than reasonably equivalent value while insolvent.