A lender's underwriting guidelines automatically reject applications for properties in census tracts where the median income is below a certain threshold, which disproportionately affects minority communities. This policy likely:
Correct Answer
B) Violates fair housing laws through disparate impact
Even facially neutral policies can violate the Fair Housing Act if they have a disparate impact on protected classes. Automatically rejecting applications based on census tract income levels that disproportionately affect minority communities may constitute illegal discrimination unless there is a substantial, legitimate, nondiscriminatory business justification.
Why This Is the Correct Answer
Even facially neutral policies can violate the Fair Housing Act if they have a disparate impact on protected classes. Automatically rejecting applications based on census tract income levels that disproportionately affect minority communities may constitute illegal discrimination unless there is a substantial, legitimate, nondiscriminatory business justification.
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A borrower's interest rate increases by 0.25% three days before closing due to credit score changes discovered during final verification. The original Closing Disclosure was provided 6 days earlier. What must occur?