A bank's loan committee consistently approves white applicants at a 90% rate but only approves Black applicants at a 60% rate, despite similar credit profiles. When questioned, committee members deny any racial bias and claim decisions are based solely on credit factors. This pattern suggests:
Correct Answer
C) Potential disparate treatment discrimination
The significant difference in approval rates between racial groups with similar credit profiles suggests potential disparate treatment, even if the committee denies intentional bias. Statistical evidence of different treatment of similarly situated applicants can support a disparate treatment claim under fair lending laws, and intent can sometimes be inferred from patterns of discriminatory outcomes.
Why This Is the Correct Answer
The significant difference in approval rates between racial groups with similar credit profiles suggests potential disparate treatment, even if the committee denies intentional bias. Statistical evidence of different treatment of similarly situated applicants can support a disparate treatment claim under fair lending laws, and intent can sometimes be inferred from patterns of discriminatory outcomes.
More Ethics & Fraud Questions
A lender's mobile app prominently displays a 'pre-qualification' feature that asks for minimal information but generates loan amount estimates that are consistently 20-30% higher than what borrowers actually qualify for when they complete full applications. The app includes a disclaimer that estimates are 'subject to full underwriting.' This practice is most likely:
An MLO discovers that multiple loan applications from different borrowers contain identical handwriting in the signature sections, despite different purported signers. The applications were submitted by different real estate agents. What is the most appropriate immediate action?
A mortgage loan originator receives a lead from a real estate agent about a potential borrower. Before calling this consumer, the MLO must:
An MLO tells Asian applicants that they need larger down payments 'because that's what investors prefer for your type of loan,' while telling similarly qualified white applicants that standard down payments are acceptable. This practice represents:
A mortgage company advertises 'Guaranteed approval for all credit types!' but internally has minimum credit score requirements of 580. This advertisement is problematic because it:
People Also Study
Federal Mortgage-Related Laws
23% of exam
General Mortgage Knowledge
23% of exam
Mortgage Loan Origination Activities
25% of exam
Uniform State Test Content
12% of exam
Previous Question
An 80-year-old homeowner with a home worth $300,000 and no existing mortgage is offered a $250,000 cash-out refinance loan with payments of $2,100 monthly against their $1,800 monthly Social Security income. The lender focuses on the home's value rather than payment ability. This primarily represents:
Next Question
A credit scoring model includes 'years at current address' as a significant factor. Analysis reveals this criterion results in lower scores for 25% of Native American applicants compared to 8% of white applicants, due to cultural patterns of extended family housing arrangements. The model developer argues residential stability predicts creditworthiness. This scenario most likely represents: