Under the California Holden Act, a lender is prohibited from denying a loan based on all of the following EXCEPT:
Correct Answer
D) The applicant's documented debt-to-income ratio and payment history on prior obligations
The Holden Act (Health & Safety Code §35800 et seq.) prohibits discriminatory lending based on neighborhood or property characteristics unrelated to individual creditworthiness. Evaluating an applicant's debt-to-income ratio and prior payment history is a legitimate, individualized underwriting criterion and is expressly not prohibited by the Act.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
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