Under the Fair Housing Act, a lender who requires a higher down payment from buyers purchasing in predominantly minority neighborhoods compared to other neighborhoods is engaging in:
Why B. Reverse redlining — predatory lending targeting minority neighborhoods with worse terms Is Correct
Answer B: B. Reverse redlining — predatory lending targeting minority neighborhoods with worse terms
Exam Tip: Fair Housing
Fair Housing questions test both federal (Fair Housing Act of 1968) and state-level protected classes. The federal protected classes are race, color, religion, national origin, sex, familial status, and disability. Many states add additional protections.
Key Fair Housing Terms in This Question
Federal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.
SteeringAn illegal practice where a real estate agent directs buyers toward or away from certain neighborhoods based on the buyer's race, religion, national origin, or other protected characteristics.
RedliningAn illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.
People Also Study
Related Colorado Questions
- A lender in Colorado refuses to make mortgage loans on properties located in a predominantly minority neighborhood regardless of the individual applicant's creditworthiness. This is called:Fair Housing
- Under the Fair Housing Act, a buyer's broker who advises a minority client to look for homes only in certain neighborhoods based on race is violating the law through:Fair Housing
- A Colorado lender who denies loans in certain minority-majority neighborhoods, regardless of the creditworthiness of individual applicants, is engaging in:Fair Housing
- Under the 'Equal Credit Opportunity Act' (ECOA), a Colorado lender may NOT deny a mortgage application based on:Finance
- A Colorado buyer making a conventional loan application with a credit score of 740 and a 20% down payment would typically qualify for:Finance
- A Colorado buyer wants to qualify for a $320,000 mortgage. The lender requires a maximum front-end ratio of 28%. The monthly payment (PITI) is $2,100. What minimum monthly gross income is required?Real Estate Math
- The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating against credit applicants on the basis of:Finance
- A Colorado homebuyer using a VA loan learns their lender is requiring a 'termite inspection' even though the VA does not mandate it in Colorado. The lender is:Finance
Key Terms to Know
An illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.
Fair Housing ActFederal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.
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.
Math Concepts
Study This Topic
Practice More Colorado Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Colorado Quiz →