An appraisal is used in connection with a credit transaction. Under the ECOA provision of USPAP, which characteristic is added beyond the Fair Housing Act list?
Correct Answer
B) Marital status, age or source of income
For assignments whose intended use is connected with a credit transaction, the appraiser must not base the value opinion on race, color, religion, national origin, sex, marital status, age, source of income, or the good-faith exercise of rights under the Consumer Credit Protection Act.
Why This Is the Correct Answer
Option B is correct because the ECOA provision bars basing value on race, color, religion, national origin, sex, marital status, age, source of income, or the good-faith exercise of rights under the Consumer Credit Protection Act. Marital status, age and source of income do not appear in the Fair Housing Act list. They are therefore characteristics added beyond that list.
Why the Other Options Are Wrong
Option A: Square footage of the home
Option A is wrong because the square footage of the home is a physical property characteristic that appraisers properly analyze, not an ECOA protected characteristic.
Option C: The property’s distance from employment
Option C is wrong because the property's distance from employment is a location factor, not a characteristic listed in the ECOA provision.
Option D: The borrower’s choice of lender
Option D is wrong because the borrower's choice of lender is not one of the characteristics listed in the ECOA provision.
Credit adds marriage, age, income
Credit transactions add personal financial life facts: marital status, age and source of income.
How to use: Use this when distinguishing the ECOA list from the Fair Housing Act list.
Exam Tip
Separate the two lists by context: housing assignments point to Fair Housing Act classes, and credit-related assignments add ECOA characteristics.
Common Mistakes to Avoid
- -Thinking the ECOA list is identical to the Fair Housing Act list
- -Treating physical property features as protected characteristics
- -Forgetting source of income as a protected characteristic in credit assignments
Concept Deep Dive
Analysis
This question tests the Equal Credit Opportunity Act characteristics in USPAP for assignments connected with credit transactions. Compared with the Fair Housing Act list, the ECOA list adds marital status, age and source of income, among other items. Pick the option naming those added characteristics.
Background Knowledge
USPAP's Nondiscrimination section references both the Fair Housing Act and the Equal Credit Opportunity Act. For assignments connected with a credit transaction, the ECOA list applies, which includes marital status, age, source of income and good-faith exercise of consumer credit rights. These cannot be a basis for the value opinion.
Real-World Application
A borrower's income comes partly from public assistance. In a lending appraisal, the appraiser does not let that source of income influence the value opinion.
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