Which type of testing involves regulators sending matched pairs of applicants with similar qualifications but different protected characteristics to test for discrimination?
Correct Answer
C) Mystery shopper testing
Mystery shopper testing (also called paired testing) involves sending testers with similar financial qualifications but different protected characteristics (such as race or gender) to apply for loans to detect discriminatory treatment in the application process.
Why This Is the Correct Answer
Mystery shopper testing (also called paired testing) involves sending testers with similar financial qualifications but different protected characteristics (such as race or gender) to apply for loans to detect discriminatory treatment in the application process.
More Ethics & Fraud Questions
A lender's mobile app prominently displays a 'pre-qualification' feature that asks for minimal information but generates loan amount estimates that are consistently 20-30% higher than what borrowers actually qualify for when they complete full applications. The app includes a disclaimer that estimates are 'subject to full underwriting.' This practice is most likely:
An MLO discovers that multiple loan applications from different borrowers contain identical handwriting in the signature sections, despite different purported signers. The applications were submitted by different real estate agents. What is the most appropriate immediate action?
A mortgage loan originator receives a lead from a real estate agent about a potential borrower. Before calling this consumer, the MLO must:
An MLO tells Asian applicants that they need larger down payments 'because that's what investors prefer for your type of loan,' while telling similarly qualified white applicants that standard down payments are acceptable. This practice represents:
A mortgage company advertises 'Guaranteed approval for all credit types!' but internally has minimum credit score requirements of 580. This advertisement is problematic because it:
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Previous Question
An MLO's spouse works as a loan processor at a competing mortgage company. What potential conflict issue should the MLO be most concerned about?
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A borrower with a 4.5% mortgage rate and $40,000 in equity is contacted monthly by the same lender offering to 'unlock your home's value.' After the fourth contact, the borrower refinances to a 6.25% rate, extracting $30,000 cash but paying $6,500 in fees. Six months later, the lender contacts them again about another refinance. The lender's primary violation involves: