A mortgage file is paused during a lock-desk handoff because of Fair Housing Act Redlining. Which answer should select the answer that fits the governing requirement?
Correct Answer
A) Remove the redlining or disparate-treatment practice
The Fair Housing Act prohibits discrimination in housing-related transactions, including mortgage lending, based on protected classes such as race, color, religion, sex, national origin, familial status, or disability. Redlining is a form of illegal discrimination where services are denied or terms are worsened based on the geographic location of a property, often linked to the racial composition of an area. Why this is correct: "Remove the redlining or disparate-treatment practice" is the necessary action because the Fair Housing Act mandates eliminating any discriminatory practice. Why the other choices are wrong: "Use the high-cost loan standard to decide the Fair Housing Act Redlining issue before confirming the trigger facts" is wrong because high-cost loan rules (like HOEPA) are separate; redlining is assessed under Fair Housing Act standards, not loan cost. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because Fair Housing Act compliance is mandatory and proactive. "Rely on oral agreement when the rule requires documented compliance" is wrong because fair lending compliance requires documented policies and actions, not oral agreements. Exam tip: Redlining violates the Fair Housing Act; lenders must avoid any practice that discriminates based on a protected class or geographic area associated with a protected class.
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 B: Use the high-cost loan standard to decide the Fair Housing Act Redlining 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: 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 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
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