During a fair lending examination, regulators use regression analysis to:
Correct Answer
A) Determine if loan pricing varies by protected class characteristics
Regression analysis is a statistical technique used by regulators to isolate the effect of prohibited factors (like race or gender) on lending decisions by controlling for legitimate credit-related variables. This helps identify potential discrimination in pricing, approval rates, or loan terms.
Why This Is the Correct Answer
Regression analysis is a statistical technique used by regulators to isolate the effect of prohibited factors (like race or gender) on lending decisions by controlling for legitimate credit-related variables. This helps identify potential discrimination in pricing, approval rates, or loan terms.
More Ethics & Fraud Questions
A lender's mobile app prominently displays a 'pre-qualification' feature that asks for minimal information but generates loan amount estimates that are consistently 20-30% higher than what borrowers actually qualify for when they complete full applications. The app includes a disclaimer that estimates are 'subject to full underwriting.' This practice is most likely:
An MLO discovers that multiple loan applications from different borrowers contain identical handwriting in the signature sections, despite different purported signers. The applications were submitted by different real estate agents. What is the most appropriate immediate action?
A mortgage loan originator receives a lead from a real estate agent about a potential borrower. Before calling this consumer, the MLO must:
An MLO tells Asian applicants that they need larger down payments 'because that's what investors prefer for your type of loan,' while telling similarly qualified white applicants that standard down payments are acceptable. This practice represents:
A mortgage company advertises 'Guaranteed approval for all credit types!' but internally has minimum credit score requirements of 580. This advertisement is problematic because it:
People Also Study
Federal Mortgage-Related Laws
23% of exam
General Mortgage Knowledge
23% of exam
Mortgage Loan Origination Activities
25% of exam
Uniform State Test Content
12% of exam
Previous Question
A mortgage professional helps structure a loan where the borrower will immediately rent the property to a family member at below-market rates, with the understanding that this arrangement helps the borrower qualify while providing affordable housing to the relative. This situation represents:
Next Question
A fair lending examination reveals that a lender's minimum credit score requirement of 680 disproportionately excludes minority applicants compared to non-minority applicants. To defend this practice, the lender must demonstrate that the requirement is: