230907 ECOA & Fair Lending: Examiner Hot Buttons ~ CU

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* 1. Which is not protected from discrimination under the Equal Credit Opportunity Act?

Credit score

Race

Religion

Marital status

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* 2. Does the Fair Housing Act cover residential real estate loans?

Yes

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* 3. Which is not prohibited discrimination?

Using different standards in determining whether to extend credit

Varying the terms of credit offered

Treating a borrower differently in servicing a loan

Encouraging minority applicants to apply for credit

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* 4. If an applicant applies for individual credit, when may a lender ask for the applicant’s marital status?

If the applicant doesn’t satisfy the lender’s underwriting criteria

If the credit is to be secured

Lender may never ask an applicant’s marital status

Lender may always ask about an applicant’s marital status

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* 5. Which documents can the lender require the spouse to sign?

Promissory note

Collateral pledge agreement

Neither a nor b

Both a and b

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* 6. Which is not overt evidence of disparate treatment?

Lender openly discriminates on a prohibited basis

Lender explicitly considers prohibited factors in the loan decision

Lender secretly holds animosity for certain minorities

Lender expresses a discriminatory preference although doesn’t act on it

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* 7. What is comparative evidence of disparate treatment?

A neutral policy that is applied equally to all applicants disproportionately burdens persons on a prohibited basis

A neutral policy that is applied equally to all applicants does not disproportionately burden any persons on a prohibited basis

Differences in treatment that are not explained by legitimate, nondiscriminatory factors

Differences in treatment that are expressly due to a prohibited basis

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* 8. For a finding of disparate impact, must the lender have discriminatory intent?

Yes

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* 9. Which is an accurate statement about disparate impact?

A neutral policy of the lender can still be found to have a disparate impact

If the lender’s policy has a disparate impact, the next step is to determine whether the policy is justified by business necessity

Even if the lender’s policy can be justified by business necessity, it still may be discriminatory if an alternative approach would serve the same purpose with less discriminatory effect

All of the above

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* 10. What should the lender do to mitigate the risk of a fair lending charge?

Set specific underwriting criteria and never permit any deviation from that underwriting criterion

Give a written statement to all applicants of a protected class acknowledging that the lender is obligated to follow the fair lending laws

Provide fair lending training to your staff so they consistently apply the same standards

Immediately approve or deny the loan based solely on the credit score if the applicant is of a protected class