Fair Housing
In Michigan, a mortgage lender who charges higher interest rates to borrowers in predominantly minority neighborhoods than to equally qualified borrowers in predominantly white neighborhoods is practicing:
AMarket-based risk pricing
BIllegal reverse redlining and lending discrimination under ECOA and the Fair Housing Act✓ Correct
CPermissible geographic risk assessment
DRequired risk-based pricing under federal banking regulations
Explanation
Charging higher rates to equally qualified borrowers based on neighborhood racial composition is reverse redlining—a form of illegal lending discrimination violating ECOA and the Fair Housing Act, regardless of whether it is intentional or disparate in impact.
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