Two applicants with the same score, the same reserves and the same ratio receive different pricing, and the only difference on the file is national origin. What is the correct standard?
Correct Answer
D) Apply neutral standards without protected-class discrimination
Why this is correct: The original explanation states that mortgage terms and treatment cannot discriminate on protected-class grounds. The Fair Housing Act prohibits discrimination in housing-related transactions based on race, color, religion, sex, national origin, familial status, or disability. Applying neutral, objective standards without regard to these protected characteristics is the fundamental requirement. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because fair housing laws are civil rights statutes with no internal waiver. "Delay the Fair Housing Act step until a later construction draw review instead of acting now" is wrong because fair housing compliance must be integrated at every stage of the transaction. "Rely on oral agreement when the rule requires documented compliance" is wrong because fair lending compliance often requires documentation of decisions and consistent treatment. Exam tip: Fair Housing Act violations can occur through disparate treatment (intentional discrimination) or disparate impact (a neutral policy that disproportionately harms a protected class).
Why This Is the Correct Answer
The correct response is "Apply neutral standards without protected-class discrimination" because Mortgage terms and treatment cannot discriminate or redline on protected-class grounds.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option B: Delay the Fair Housing Act step until a later construction draw 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.
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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