A mortgage file is paused during a risk-control review because of Fair Housing Act Redlining. Which answer should apply the requirement without relying on borrower preference?

Correct Answer

B) Remove the redlining or disparate-treatment practice

Why this is correct: The Fair Housing Act prohibits discrimination in housing-related transactions, including mortgage lending, based on protected characteristics such as race, color, religion, sex, national origin, familial status, or disability. Redlining is an illegal practice of denying credit or services in specific geographic areas based on the demographics of those areas. If a risk review identifies a redlining or disparate-treatment practice, the only compliant action is to remove that discriminatory practice immediately. Why the other choices are wrong: "Resolve the Fair Housing Act Redlining issue with the government-loan eligibility exception that does not fit the facts" is wrong because there is no exception under fair lending laws that permits discrimination based on government-loan eligibility. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because fair lending violations are serious and must be corrected upon discovery. "Rely on oral agreement when the rule requires documented compliance" is wrong because fair lending compliance requires documented, consistent policies and actions. Exam tip: Fair Housing violations can be based on either disparate treatment (intentional discrimination) or disparate impact (a neutral policy that has a discriminatory effect). Both are illegal.