A mortgage company's underwriting guidelines require verification of employment for self-employed applicants but not for traditionally employed applicants. Data shows this policy disproportionately affects Latino applicants who are more likely to be self-employed. The company argues this is necessary for risk management. This situation involves:
Correct Answer
B) A potential disparate impact claim that requires analysis of business justification
This presents a potential disparate impact case because a facially neutral policy (different treatment for self-employed vs. traditionally employed) has a disproportionate effect on a protected class. The lender's business justification (risk management) would need to be evaluated to determine if it's legitimate and whether less discriminatory alternatives exist.
Why This Is the Correct Answer
This presents a potential disparate impact case because a facially neutral policy (different treatment for self-employed vs. traditionally employed) has a disproportionate effect on a protected class. The lender's business justification (risk management) would need to be evaluated to determine if it's legitimate and whether less discriminatory alternatives exist.
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