A bank in Minneapolis uses an automated underwriting system that approves mortgage applications at a significantly lower rate for applicants from certain zip codes, which happen to be predominantly occupied by racial minorities. No individual loan officer makes racially motivated decisions. Under Minnesota fair housing law, which concept best describes this potential violation?
Correct Answer
B) Disparate impact, because a neutral policy produces discriminatory outcomes for a protected class
Disparate impact occurs when a facially neutral policy or practice produces a disproportionately adverse effect on members of a protected class, even without discriminatory intent. Under the Minnesota Human Rights Act (Minn. Stat. Ch. 363A) and consistent with fair housing principles, a lender's automated system that disproportionately denies applications from minority-majority zip codes may constitute unlawful discrimination based on disparate impact, even if no individual acted with discriminatory intent.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
License requirements are the mandatory qualifications—including pre-licensing education, examination, and background checks—that a person must satisfy before legally practicing real estate. These requirements are established and enforced by each state's real estate commission.
More Practice Of Real Estate Questions
In Wyoming real estate practice, an associate broker or salesperson is not associated with a responsible broker at renewal. What should the licensee remember?
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