A lender's policy states that loans for properties in ZIP codes with median incomes below $40,000 require a minimum 25% down payment, while loans in higher-income ZIP codes require only 10% down. If these ZIP codes correlate strongly with racial composition, this practice is:
Correct Answer
B) Prohibited redlining with disparate impact
This practice constitutes redlining and disparate impact discrimination under the Fair Housing Act. Even if the policy appears neutral on its face, using geographic criteria that correlate with racial composition to impose different lending terms creates an unlawful disparate impact on protected classes.
Why This Is the Correct Answer
This practice constitutes redlining and disparate impact discrimination under the Fair Housing Act. Even if the policy appears neutral on its face, using geographic criteria that correlate with racial composition to impose different lending terms creates an unlawful disparate impact on protected classes.
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