A mortgage applicant documents steady child support and public assistance payments that are likely to continue. The lender refuses to count either source when computing qualifying income, although it counts the wages of other applicants in full. Which federal law does this refusal violate?
Correct Answer
D) Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act bars credit discrimination on grounds including sex, marital status, age, and the fact that all or part of the applicant's income comes from a public assistance program. Its implementing rule, Regulation B, specifically forbids a creditor from discounting or refusing to consider income because of its source, so a lender may test whether child support is reliable and likely to continue but may not disregard it because of what it is. Refusing to count documented public assistance at all is the plainest form of that prohibited discounting.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Financing Question
Background Knowledge for Financing
Real World Application in Financing
Common Mistakes to Avoid on Financing Questions
Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
More Financing Questions
Compliance case Cedar Docket frames the issue this way. A Florida buyer borrows $272,000 on a purchase price of $320,000. What is the loan-to-value ratio?
A lender in Montgomery is considering whether to initiate foreclosure on a defaulting borrower's residential property. The borrower has missed six consecutive mortgage payments. Under Alabama law, which step must the lender complete FIRST before the property can be sold at a foreclosure sale?
In Delaware financing, which theory is practiced?
Audit memo Cedar Case highlights this Florida rule. The purchase price is $360,000, and the lender will lend 90% of the price. How much cash down payment must the buyer bring?
A California buyer is comparing two deed of trust loan offers. Loan A has a 5.5% interest rate with 0 points. Loan B has a 5% interest rate with 2 points. Which tool required by federal law helps the buyer compare the true cost of these two loans?
- → A Florida real estate licensee is helping a buyer understand loan-to-value ratios. The buyer asks about the maximum LTV typically allowed for conventional loans without private mortgage insurance (PMI). What should the licensee explain?
- → A borrower in Greenville, South Carolina defaults on her mortgage payments. The lender wants to recover the property. Which process must the lender follow under South Carolina law?
- → Tom defaults on his mortgage in Fargo, North Dakota. His lender, Heartland Savings, wants to foreclose. Which of the following correctly describes the foreclosure process Heartland Savings must follow under North Dakota law?
- → Under Alaska's Deed of Trust Act (AS 34.20.070–34.20.135), which of the following is NOT a required party to a deed of trust?
- → James Wilson's share loan application for a co-op in Staten Island was approved. What will secure this loan?
- → Tennessee has which redemption period after foreclosure?
- → Private Mortgage Insurance (PMI) is typically required on a conventional loan when the loan-to-value (LTV) ratio exceeds what threshold?
- → A homeowner in Oklahoma City is purchasing a property with a sales price of $320,000. The buyer is obtaining a conventional loan with a 20% down payment. The lender charges an origination fee of 1.5% of the loan amount. What is the total origination fee the buyer will pay at closing?
- → Deficiency judgments in Alabama are:
- → Sarah Martinez is purchasing a co-op apartment in Manhattan for $750,000. Her lender explains the financing structure for cooperative units. What type of loan will Sarah receive for this co-op purchase?
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Valuation and Market Analysis
10% of exam
Related Articles
How to Review Real Estate Financing Questions by Separating Loan Purpose, Cost, and Risk
A topic that feels clear in notes can still fail in practice if recall has not caught up with recognition. If you are searching for review real estate...
Real Estate Exam Practice Questions by Topic (2026): Free Sets for Contracts, Agency, Financing
Get topic-based real estate exam practice sets and a simple sequence to move from learning to timed mocks.
Real Estate Exam Topics (2026): High-Yield Areas + Common Traps (Contracts, Agency, Financing, Fair Housing)
Learn the highest-frequency real estate exam topics and the traps that cause most wrong answers—plus how to study them.