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
D) 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.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
Which information is NOT required to be included in an AfBA disclosure?
A lender quotes an APR of 4.25% on a mortgage loan, but the actual APR calculation results in 4.28%. Under TILA's APR accuracy tolerance, is this disclosure compliant?
Which of the following fees would NOT be included in the finance charge calculation under TILA?
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A lender provides a borrower with initial TILA disclosures showing an APR of 4.5%. Due to market changes, the final APR at closing is 4.625%. What disclosure requirement applies?
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