Before the team acts on a branch training session, a licensing coordinator must address Fair Housing Act. Which response is most defensible?
Correct Answer
B) Remove the redlining or disparate-treatment practice
Why this is correct: The Fair Housing Act (FHA) prohibits discrimination in mortgage lending. "Redlining" is an illegal practice of denying or avoiding providing services in certain geographic areas based on the race or ethnicity of residents. "Disparate treatment" is intentional discrimination against a person based on a protected characteristic. The most defensible and required response upon identifying such a practice is to immediately remove or cease the discriminatory practice to achieve compliance. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because the FHA is a federal civil rights law; no internal policy can create an exception to it. "Use prior changed-circumstance approval as a substitute for the current Fair Housing Act requirement" is wrong because a changed-circumstance under TILA/Regulation Z (for disclosures) is unrelated to and cannot substitute for Fair Housing Act compliance. "Rely on oral agreement when the rule requires documented compliance" is wrong because fair lending compliance, such as documenting the reasons for a credit decision, requires written records to demonstrate non-discriminatory treatment. Exam tip: Fair Housing violations are serious. If you find discrimination, the only acceptable action is to stop it and correct the file.
Why This Is the Correct Answer
The correct response is "Remove the redlining or disparate-treatment practice" because Mortgage terms and treatment cannot discriminate or redline on protected-class grounds.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option C: Use prior changed-circumstance approval as a substitute for the current Fair Housing Act requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option D: Rely on oral agreement when the rule requires documented compliance.
Rely on oral agreement when the rule requires documented compliance. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
Fair Housing Act compliance: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to Fair Housing Act compliance; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More Federal Laws Questions
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