A caller with an accent asks about a loan on a 3-unit building. The originator says: "Those are hard to get approved. You would probably be better off renting for now." If the originator discourages the caller because of perceived national origin rather than a neutral credit criterion, does Regulation B prohibit the statement before an application is submitted?
Correct Answer
D) Prohibited: discouraging an application is reached before one is made
D. The prohibition can apply before an application exists. The caller is a prospective applicant; the stem identifies perceived national origin as the reason for discouragement. The statement signals credit will be unavailable because of that characteristic. A later application or denial is not necessary. Scope and exceptions: An accent alone does not prove discrimination. The stem supplies the prohibited reason; neutral explanations of genuine credit requirements are different. Source: 1002.4(b) and interpretation 4(b)-1 — https://www.consumerfinance.gov/rules-policy/regulations/1002/4/
Why This Is the Correct Answer
D. The prohibition can apply before an application exists. The caller is a prospective applicant; the stem identifies perceived national origin as the reason for discouragement. The statement signals credit will be unavailable because of that characteristic. A later application or denial is not necessary. Scope and exceptions: An accent alone does not prove discrimination. The stem supplies the prohibited reason; neutral explanations of genuine credit requirements are different.
Why the Other Options Are Wrong
Option A: Permitted: no application exists yet, so nothing has been denied
Incorrectly excludes prospective applicants.
Option B: Permitted, as advising against a difficult loan is a service to the caller
Calling discrimination helpful advice does not change its basis.
Option C: Prohibited only if the caller later applies and is denied on those grounds
Adds an unsupported later-denial requirement.
Exam Tip
Fair-lending obligations start before the application form.
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