A supervisory file review raises a question about Fair Housing Act compliance. Which action should the licensing coordinator recommend?
Correct Answer
D) Remove the redlining or disparate-treatment practice
Why this is correct: The Fair Housing Act (FHA) prohibits discrimination in housing-related transactions based on protected characteristics (race, color, religion, sex, national origin, familial status, disability). Redlining (discriminatory denial of services in certain areas) and disparate treatment (different treatment of individuals) are illegal practices that must be identified and eliminated. Why the other choices are wrong: "Apply the correct general concept to the wrong ability-to-repay stage rather than the Fair Housing Act rule" is wrong because it describes misapplying a concept from a different rule (like ATR), not addressing the core FHA anti-discrimination mandate. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because FHA compliance is mandatory and proactive; waiting for a regulator is non-compliant. "Rely on oral agreement when the rule requires documented compliance" is wrong because while FHA violations can be based on actions, fair lending compliance generally requires documented policies and non-discriminatory treatment, not informal agreements. Exam tip: For Fair Housing, focus on the prohibited bases and practices like redlining and disparate treatment. The goal is to remove discriminatory practices.
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: Apply the correct general concept to the wrong ability-to-repay stage rather than the Fair Housing Act rule.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option B: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option C: 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
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