A lender's fair lending examination reveals that African American applicants are denied at a rate of 25% while white applicants with similar credit profiles are denied at only 10%. This statistical evidence would most likely support a claim of:
Correct Answer
B) Disparate impact discrimination
Disparate impact discrimination occurs when a lender's practices have a disproportionate adverse effect on a protected class, even if there was no intent to discriminate. The statistical disparity in denial rates between racial groups is classic evidence of disparate impact under the Fair Housing Act and ECOA.
Why This Is the Correct Answer
Disparate impact discrimination occurs when a lender's practices have a disproportionate adverse effect on a protected class, even if there was no intent to discriminate. The statistical disparity in denial rates between racial groups is classic evidence of disparate impact under the Fair Housing Act and ECOA.
More Ethics & Fraud Questions
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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?
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An MLO works for a bank that offers special employee pricing on loans. The MLO's neighbor, who is a bank employee in a different department, asks the MLO to help them get a mortgage using the employee discount. What potential issue exists?