A team member asks about ECOA Prohibited Basis Discrimination in a consumer complaint triage while trying to choose the compliant next step. Which response should the branch manager use?
Correct Answer
D) Review any neutral policy with discriminatory effect
Why this is correct: The governing concept under ECOA is that discrimination is prohibited not only by intent but also by effect. A neutral policy that has a discriminatory impact on a protected class (e.g., race, national origin) is illegal unless justified by business necessity. Therefore, when a complaint suggests discrimination, the compliant step is to "Review any neutral policy with discriminatory effect" to assess its legality. Why the other choices are wrong: Continuing the activity because the borrower appears willing to proceed is wrong because a borrower's willingness does not cure an ECOA violation. Using the consumer complaint standard to decide the ECOA issue before confirming the trigger facts is wrong because the facts of the specific case must be investigated first. Documenting the issue later instead of correcting the compliance problem first is wrong because potential discrimination requires immediate review and corrective action. Exam tip: ECOA covers both intentional discrimination and policies with an unlawful discriminatory effect (disparate impact).
Why This Is the Correct Answer
The correct response is "Review any neutral policy with discriminatory effect" because Fair lending requires equal treatment and credit-related standards without prohibited-basis discrimination.
Why the Other Options Are Wrong
Option A: Continue the activity because the borrower appears willing to proceed.
Continue the activity because the borrower appears willing to proceed. is not correct because it does not apply the rule tested by this file scenario.
Option B: Use the consumer complaint standard to decide the ECOA Prohibited Basis Discrimination issue before confirming the trigger facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Document the issue later instead of correcting the compliance problem first.
Document the issue later instead of correcting the compliance problem first. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
fair-lending controls: 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-lending controls; 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
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