Question 1

Which federal law prohibits discrimination in residential mortgage lending based on race, color, religion, national origin, sex, familial status, or disability?

Accepted Answer

The Fair Housing Act (FHA) prohibits discrimination in residential real estate transactions, including mortgage lending, based on these seven protected classes.

Question 2

Under ECOA, what is the maximum number of days a creditor has to notify an applicant of an adverse action after receiving a completed credit application?

Accepted Answer

A creditor must notify an applicant of adverse action within 30 days of receiving a completed credit application.

Question 3

What term describes the illegal practice of denying loans or insurance to residents of certain geographic areas, often based on the racial composition of those neighborhoods?

Accepted Answer

Redlining is the illegal practice of refusing to lend or offer financial services in specific geographic areas based on the demographic characteristics of those neighborhoods.

Question 4

What is the term for the practice of directing borrowers toward loan products that are more costly or less favorable than the products they qualify for, based on a protected class characteristic?

Accepted Answer

Steering is the practice of directing borrowers to loan products based on a protected characteristic rather than the borrowers' actual qualifications, often resulting in higher-cost loans.

Question 5

Under ECOA, which protected basis specifically prohibits discrimination against applicants who receive income from a public assistance program?

Accepted Answer

ECOA prohibits discrimination based on the fact that income derives from a public assistance program, making it one of the nine protected bases alongside race, color, religion, national origin, sex, marital status, age, and good-faith exercise of rights.

Ethics & Consumer Protection – NMLS SAFE Exam Flashcards

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