Finance
Under the 'Equal Credit Opportunity Act' (ECOA), a Colorado lender may NOT deny a mortgage application based on:
AA. Insufficient income to support the loan
BB. Race, color, religion, national origin, sex, marital status, age, or because the applicant receives public assistance✓ Correct
CC. Poor credit history
DD. Insufficient down payment
Explanation
ECOA prohibits creditors from discriminating against applicants in any aspect of a credit transaction based on race, color, religion, national origin, sex, marital status, age (provided the applicant is of legal age), or because the applicant receives income from public assistance programs. Creditworthiness criteria (income, credit history, assets) remain legitimate.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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