A mortgage company uses an automated underwriting system that flags applications from certain ZIP codes for additional review. The company argues this is based on property values, not demographics. Under Regulation B:
Correct Answer
B) This violates ECOA if the ZIP codes correlate with protected class concentrations
Under Regulation B, even facially neutral policies can violate ECOA if they have a disparate impact on protected classes. Using ZIP codes that correlate with racial or ethnic concentrations for differential treatment can constitute prohibited discrimination, regardless of the stated business justification.
Why This Is the Correct Answer
Under Regulation B, even facially neutral policies can violate ECOA if they have a disparate impact on protected classes. Using ZIP codes that correlate with racial or ethnic concentrations for differential treatment can constitute prohibited discrimination, regardless of the stated business justification.
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