Fair Lending and Equal Credit Opportunity Flashcards

A lender is required under ECOA to consider alimony and child support as income if the applicant chooses to disclose it. This protects primarily which group?

Answer: Divorced or separated women

The ECOA rule on alimony and child support primarily protects divorced or separated women who rely on these payments as income.

What is a 'pre-application' fair lending risk in the mortgage context?

Answer: Discouraging applicants from applying based on protected characteristics

Pre-application risks include discouraging or deterring protected class members from applying, which occurs before a formal application is submitted.

Under the Fair Housing Act, which of the following is NOT a protected class?

Answer: Income level

Income level is not a protected class under the Fair Housing Act; the protected classes are race, color, religion, national origin, sex, disability, and familial status.

A bank's fair lending self-assessment program should include:

Answer: Statistical analysis of lending data to detect potential disparities by protected class

Effective fair lending self-assessment includes statistical analysis of lending decisions, pricing, and terms to identify potential disparities by protected class.

The 'similarly situated' analysis in fair lending compares:

Answer: Applicants who are comparable in creditworthiness but differ by protected class

'Similarly situated' analysis compares applicants with comparable qualifications, loan features, and risk factors who differ only in protected class membership.

Which metric is commonly used to identify potential redlining in a fair lending examination?

Answer: Application and origination rates in majority-minority census tracts vs. peer lenders

Examiners compare application and origination rates in majority-minority census tracts to peer lenders operating in the same market to detect potential redlining.