A branch onboarding review raises a question about Fair Housing Act compliance. Which action should the policy analyst recommend?
Correct Answer
C) Review the policy for unlawful disparate impact
Why this is correct: The Fair Housing Act prohibits not only intentional discrimination (disparate treatment) but also policies and practices that have a discriminatory effect (disparate impact) on a protected class, even if the policy appears neutral on its face. A compliant fair housing review must therefore examine policies for potential unlawful disparate impact. Why the other choices are wrong: Using an internal exception instead of the required federal disclosure or timing rule is wrong because fair housing protections are federal law and cannot be circumvented by internal policy. Waiting until a regulator asks for the file before applying the federal requirement is wrong because fair housing compliance must be proactive and ongoing. Applying the TRID timing rule even though the file is testing Fair Housing Act is wrong because TRID governs loan disclosures, which is a separate legal area from anti-discrimination law. Exam tip: Remember that the Fair Housing Act covers both 'disparate treatment' (intentional discrimination) and 'disparate impact' (unintentional discriminatory effect).
Why This Is the Correct Answer
The correct response is "Review the policy for unlawful disparate impact" 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: 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: Apply the TRID timing timing rule even though the file is testing Fair Housing Act.
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 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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