An Illinois residential mortgage licensee charges an applicant a higher loan rate solely because of the applicant's national origin. The applicant otherwise qualifies for the lower rate. How does 205 ILCS 635/3-8 treat this pricing decision?
Correct Answer
D) It is prohibited discrimination because loan terms were varied based on national origin
Section 3-8 prohibits varying loan terms or application procedures, or refusing loans, because of specified protected characteristics including national origin. An approval at a discriminatory price can violate the rule even without denial. Disclosure of the reason or accurate APR disclosure does not make that discriminatory pricing lawful. Source: https://www.ilga.gov/documents/legislation/ilcs/documents/020506350K3-8.htm
Why This Is the Correct Answer
Illinois RMLA prohibits discrimination or redlining by refusing loans or varying loan terms or application procedures because of borrower race, color, religion, national origin, age, gender, marital status. This is correct because Illinois RMLA prohibits discrimination or redlining by refusing loans or varying loan terms or application procedures because of borrower race, color, religion, national origin, age, gender, marital status, or, for a mortgage loan, solely because of the geographic location of the proposed security.
Why the Other Options Are Wrong
Option A: It is permissible if the applicant receives a written explanation
Rely on prior mortgage experience instead of the an application package and checks application and licensing qualifications rule. is not correct because the state rule supports: Illinois RMLA prohibits discrimination or redlining by refusing loans or varying loan terms or application procedures because of borrower race, color, religion, national origin, age, gender, marital status.
Option B: It is permissible if the lender discloses the higher APR accurately
Treat a company policy update as complete without the required state condition. is not correct because the state rule supports: Illinois RMLA prohibits discrimination or redlining by refusing loans or varying loan terms or application procedures because of borrower race, color, religion, national origin, age, gender, marital status.
Option C: It is prohibited only if the lender also denies the application
Postpone the correction until a later complaint or examination. is not correct because the state rule supports: Illinois RMLA prohibits discrimination or redlining by refusing loans or varying loan terms or application procedures because of borrower race, color, religion, national origin, age, gender, marital status.
Memory Technique
Illinois: an application package and checks application and licensing qualifications -> use the exact state rule in the explanation.
Exam Tip
Match the Illinois fact pattern to the specific an application package and checks application and licensing qualifications rule; do not answer from a generic state or federal assumption.
Common Mistakes to Avoid
- -Treating an Illinois an application package and checks application and licensing qualifications rule as a generic national mortgage rule
- -Choosing a familiar licensing answer that is not supported by the official authority
- -Ignoring the exact condition stated in the explanation
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