An appraiser applies a neutral policy that, without justification, disproportionately harms members of a protected group when a less harmful practice was available. Under the Fair Housing Act, this describes:
Correct Answer
D) Disparate impact
Disparate impact is employing neutral policies or practices that disproportionately harm a protected group, unless justified and no less disproportionate alternative exists. Disparate treatment is treating one protected group differently and less favorably.
Why This Is the Correct Answer
Option D is correct because disparate impact means employing neutral policies or practices that disproportionately harm members of a protected group, except when they are justified and no less disproportionate policies or practices could be used instead. The stem describes a neutral policy without justification where a less harmful practice was available.
Why the Other Options Are Wrong
Option A: Disparate treatment
Option A, disparate treatment, means treating members of a protected group differently and less favorably, which is direct differential treatment rather than a neutral policy with disproportionate effects.
Option B: Steering
Option B, steering, refers to guiding people toward or away from housing or areas based on protected characteristics, not to a neutral appraisal policy with disproportionate effects.
Option C: Redlining by the lender
Option C, redlining by the lender, refers to denying or limiting credit in certain areas based on protected characteristics and is a lender practice, not the neutral appraiser policy described.
Impact equals effect; treatment equals targeting
Disparate impact is about a neutral rule's effect; disparate treatment is about treating a group differently.
How to use: Use this when a question describes a neutral policy versus intentional different treatment.
Exam Tip
Key words neutral policy and disproportionately harm point to disparate impact.
Common Mistakes to Avoid
- -Believing discrimination requires intent
- -Confusing disparate impact with disparate treatment
- -Labeling an appraiser's neutral policy as steering or redlining
Concept Deep Dive
Analysis
This question tests the difference between disparate impact and disparate treatment. The stem describes a neutral policy that disproportionately harms a protected group without justification while a less harmful alternative exists. That pattern defines disparate impact, regardless of intent.
Background Knowledge
USPAP's Nondiscrimination section requires appraisers to understand and comply with antidiscrimination laws, including the Fair Housing Act. Discrimination can occur through disparate treatment, which is intentional differential treatment, or disparate impact, which is a neutral practice with unjustified disproportionate harm.
Real-World Application
An appraiser routinely selects comparables only from within a narrow boundary that excludes nearby similar areas, and the practice consistently lowers values in neighborhoods with high minority populations. Even without intent, an unjustified practice with that effect, when better comparable selection was available, can raise disparate impact concerns.
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