Finance
Which federal law prohibits discriminatory lending practices (redlining) in Maine and other states?
AThe Community Reinvestment Act only
BThe Equal Credit Opportunity Act and the Fair Housing Act✓ Correct
CThe Real Estate Settlement Procedures Act
DThe Home Mortgage Disclosure Act only
Explanation
Both the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act prohibit discriminatory lending practices such as redlining. The Fair Housing Act covers property-related discrimination; ECOA covers credit decisions.
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Key Terms to Know
Fair Housing Act
Federal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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