An MLO is reviewing procedures for a case where a loan officer wants different terms because of a protected applicant characteristic. What is the proper handling?
Correct Answer
C) Evaluate the file without prohibited-basis factors
Lines 250-254; 12 CFR 1002.4(a). Credit decisions and treatment must not turn on prohibited-basis factors. Therefore, the correct response is "Evaluate the file without prohibited-basis factors".
Why This Is the Correct Answer
The correct response is "Evaluate the file without prohibited-basis factors". Credit decisions and treatment must not turn on prohibited-basis factors.
Why the Other Options Are Wrong
Option A: Close or renew first and decide later whether the rule applied.
Close or renew first and decide later whether the rule applied. is not correct because it bypasses the rule supported by the explanation.
Option B: Allow activity to continue while the applicable status problem remains unresolved.
Allow activity to continue while the applicable status problem remains unresolved. is not correct because it bypasses the rule supported by the explanation.
Option D: Ignore the financial responsibility issue unless the borrower complains.
Ignore the financial responsibility issue unless the borrower complains. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
Discouragement and different treatment can be fair-lending problems before denial.
Exam Tip
Discouragement and different treatment can be fair-lending problems before denial.
Common Mistakes to Avoid
- -Fair lending applies to every aspect of the credit transaction, not just final approval.
More Ethics & Fraud Questions
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