A closing coordinator compares the file facts with Fair Lending Disparate Impact during a licensing team review. Which conclusion is accurate?
Correct Answer
A) Investigate and correct the disparate treatment pattern
Why this is correct: The Fair Housing Act and ECOA prohibit policies that have a discriminatory effect, known as disparate impact, even without intent. When a review identifies a potential disparate impact pattern, the lender must investigate to determine if the policy is justified by business necessity. The correct answer, "Investigate and correct the disparate treatment pattern," is the required proactive step, as 'pattern' here implies the observed effect that needs analysis. Why the other choices are wrong: "Continue the activity because the borrower appears willing to proceed" is wrong because fair lending violations are not cured by borrower consent. "Ignore the consumer-protection issue unless the borrower complains" is wrong because lenders must self-police for discrimination. "Delay the Fair Lending Disparate Impact step until a later advertising disclosure review instead of acting now" is wrong because fair lending issues require prompt attention to prevent ongoing harm. Exam tip: Disparate impact focuses on the discriminatory *effect* of a neutral policy. If data shows an adverse effect on a protected class, you must investigate immediately.
Why This Is the Correct Answer
The correct response is "Investigate and correct the disparate treatment pattern" because Fair-lending review looks for discriminatory treatment, disparate impact, and redlining risks.
Why the Other Options Are Wrong
Option B: 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 C: Ignore the consumer-protection issue unless the borrower complains.
Ignore the consumer-protection issue unless the borrower complains. is not correct because it does not apply the rule tested by this file scenario.
Option D: Delay the Fair Lending Disparate Impact step until a later advertising disclosure review instead of acting now.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
fair-lending enforcement risk: 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 enforcement risk; 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
More Ethics & Fraud Questions
In a closing-readiness check, a disclosure specialist sees facts tied to Appraisal Fraud Detection. What should the file reflect?
An MLO recommends a loan with a low initial payment that will increase sharply in two years. The borrower says retirement income will be fixed and asks whether the payment can change. What is the appropriate response?
An MLO alters a bank statement to make the applicant's account balance appear higher and submits it to underwriting. Which response is appropriate?
A branch manager asks about a loan file because marketing proposes a rate the company is not prepared to offer. What should happen?
A borrower wants cash for necessary home repairs. A proposed refinance provides $15,000 cash but adds $12,000 in costs and extends repayment by 15 years. What is the best next step for the MLO?
Before closing, the team discovers that an ad shows an interest rate but omits the APR presentation. What is the safest compliant answer?
The loan team is resolving Privacy and Confidentiality during a quality-control sample. Which action best fits the rule?
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Before closing, the team discovers that a loan officer wants different terms because of a protected applicant characteristic. What is the safest compliant answer?
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