A lender declines a couple’s home-purchase mortgage application because they expect a child in four months, assuming their working hours will fall. There is no documented income reduction. Which federal fair-lending protections are implicated by a decision based solely on the pregnancy?
Correct Answer
B) Both statutes are engaged: ECOA on sex, fair housing on familial status
B. ECOA and the Fair Housing Act can both apply. Regulation B prohibits assumptions that childbearing will interrupt income. HUD identifies pregnancy-based mortgage denials as implicating sex and familial-status protections. The two frameworks overlap rather than displacing each other. Scope and exceptions: Nondiscriminatory assessment of actual income and probable continuation remains permissible. Pregnancy alone is not evidence of an income loss. Source: 1002.6(b)(3)–(5) — https://www.consumerfinance.gov/rules-policy/regulations/1002/6/ HUD release 13-061, legal protection paragraph — https://archives.hud.gov/news/2013/pr13-061.cfm
Why This Is the Correct Answer
B. ECOA and the Fair Housing Act can both apply. Regulation B prohibits assumptions that childbearing will interrupt income. HUD identifies pregnancy-based mortgage denials as implicating sex and familial-status protections. The two frameworks overlap rather than displacing each other. Scope and exceptions: Nondiscriminatory assessment of actual income and probable continuation remains permissible. Pregnancy alone is not evidence of an income loss.
Why the Other Options Are Wrong
Option A: Only the Fair Housing Act is engaged, as ECOA does not reach housing loans
ECOA applies to mortgage credit, not just nonhousing credit.
Option C: Neither: a documented reduction in hours is an underwriting matter
The stem supplies no documented reduction; it describes an assumption.
Option D: Only ECOA is engaged, since familial status is not a basis it names
ECOA’s list does not eliminate the separate Fair Housing Act protection.
Exam Tip
Evaluate actual income circumstances, not pregnancy stereotypes.
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