An 81-year-old homeowner with no mortgage asks about a $60,000 cash-out refinance so that her nephew, who drove her to the branch, can start a business. What is the appropriate response to possible third-party influence without discriminating against the applicant based on age?
Correct Answer
B) Proceed carefully: the $60,000 and the house are hers, the gain his
Age is a prohibited basis and she may borrow. What the facts call for is care about who the loan is really for, because the debt and the house are hers while the benefit is his, and a third party present at every step is a recognized indicator. Other choices: declining because of her age is the discrimination the first point rules out; the nephew's plan is not the credit being underwritten; and requiring him to co-sign imposes a condition the applicant may not need. Source: 12 CFR 1002.2(z); elder financial exploitation indicators
Why This Is the Correct Answer
Age is a prohibited basis and she may borrow. What the facts call for is care about who the loan is really for, because the debt and the house are hers while the benefit is his, and a third party present at every step is a recognized indicator. Other choices: declining because of her age is the discrimination the first point rules out; the nephew's plan is not the credit being underwritten; and requiring him to co-sign imposes a condition the applicant may not need. Source: 12 CFR 1002.2(z); elder financial exploitation indicators
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