In a judgmental underwriting system, a lender proposes automatically rejecting a legally competent 68-year-old applicant for a 30-year mortgage solely because of age, without evaluating income, collateral or other individual circumstances. Is that automatic rejection permitted by Regulation B?
Correct Answer
A) Age may not be used to discount a 68-year-old applicant that way
A. Age alone does not justify this automatic rejection. The proposal substitutes an age cutoff for an individualized assessment. Regulation B nevertheless permits limited consideration of age in evaluating pertinent creditworthiness factors. The original explanation incorrectly described scoring as the only exception. Scope and exceptions: The commentary permits specified individual income and collateral assessments, favorable treatment of elderly applicants, and restricted age use in qualifying scoring systems. Source: 1002.6(b)(2); interpretations 6(b)(2)-1 through -4 — https://www.consumerfinance.gov/rules-policy/regulations/1002/6/
Why This Is the Correct Answer
A. Age alone does not justify this automatic rejection. The proposal substitutes an age cutoff for an individualized assessment. Regulation B nevertheless permits limited consideration of age in evaluating pertinent creditworthiness factors. The original explanation incorrectly described scoring as the only exception. Scope and exceptions: The commentary permits specified individual income and collateral assessments, favorable treatment of elderly applicants, and restricted age use in qualifying scoring systems.
Why the Other Options Are Wrong
Option B: Age may be used to decline, but not to price the 30-year loan
A denial is not exempt from the restriction.
Option C: Age may be used where the applicant is over 65 years of age
Age 65 does not create blanket permission.
Option D: Age may be used freely, as a 30-year term outlives the applicant
An assumed lifespan alone is not a free-standing rejection rule.
Exam Tip
Distinguish age alone from permitted individualized credit analysis.
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